Apple Starts to Roll Out ‘Pay Later’ Service After Long Delay

Mark Gurman, Bloomberg News

(Bloomberg) -- Apple Inc. began rolling out its first “buy now, pay later”-style service after a lengthy delay, entering a field currently dominated by Affirm Holdings Inc., Klarna Bank AB and others.

The service, called Apple Pay Later, will divide purchases into four payments, spread over six weeks, with no interest or fees. It resides in the iPhone’s Wallet app, with users able to borrow amounts of $50 to $1,000 from Apple.

The feature was first unveiled in June of last year as part of a broader push into financial services. Apple Pay Later was expected in September, but took several more months to be ready. The company said that a “pre-release” version of the service will be available for users on a “randomly selected” basis and that it plans to introduce it for all customers in the “coming months.”

In a new approach for the company, Apple will be funding the loans via a new subsidiary called Apple Financing LLC. The company will also be handling its own credit checks and running the other underlying technologies needed to power the service, an arrangement that contributed to the delays, Bloomberg News has reported. Apple also said Tuesday it will begin reporting its loans to US credit agencies in the fall.

Apple partnered with MasterCard Inc.’s installments program to power parts of the feature, while Goldman Sachs Group Inc. is the payment credential issuer used to complete transactions. Apple Pay Later requires iOS 16.4, which the company released on Monday. The iPhone maker also rolled out Apple Music Classical, a new streaming service that works with Apple Music.

Affirm, PayPal Holdings Inc. and other finance companies with buy now, pay later offerings briefly fell on the news earlier Tuesday. Affirm responded to the Apple announcement by saying that it has offered a pay later service “for a decade through personalized payment plans with term lengths ranging from six weeks to 60 months.” It added that the “prize remains massive” and that it believes it is “well-positioned to win.”

(Updates with response from Affirm in final paragraph.)