Apple Inc is working on a new service that would let people pay for any Apple Pay purchase in installments over time, rivaling the “buy now, pay later” offerings popularized by services from Affirm Holdings Inc and PayPal Holdings Inc.
The service, known internally as Apple Pay Later, is to use Goldman Sachs Group Inc as the lender for the loans needed for the installment offerings, people with knowledge of the matter said.
Goldman Sachs has been Apple’s partner for the Apple Card credit card since 2019, but the new offering is not tied to the Apple Card and does not require the use of one, the people said.
Photo: Reuters
The buy now, pay later system could help drive Apple Pay adoption and convince more users to use their iPhone to pay for items instead of standard credit cards.
Apple receives a percentage of transactions made with Apple Pay, driving additional revenue to the company’s more than US$50 billion per year services business.
The service is planned to work as follows: When a user makes a purchase via Apple Pay on their Apple device, they will have the option to pay for it either across four interest-free payments made every two weeks, or across several months with interest, one of the people said.
The plan with four payments is called “Apple Pay in 4” internally, while the longer-term payment plans are called “Apple Pay Monthly Installments.”
When making purchases via an Apple Pay Later plan, users would be able to choose any credit card to make their payments over time. The service is planned to be available for purchases made at either retail or online stores.
Apple already offers monthly installments via the Apple Card for purchases of its own products, but the new service would expand that technology to any Apple Pay transaction.
Users who want to use the Apple Pay Later service would need to be approved via an application submitted through the iPhone’s Wallet app, where they would also be able to manage their payments.
Users would need to submit a copy of their ID card to apply for the program. Apple would also offer customers the ability to exit payment plans to pay off the remainder of their purchase balance.
At least some of the Apple Pay Later plans would also exclude late fees and processing fees, only costing users interest for longer-term plans.
The service would not require a credit check on the user.
Separately, the company is also testing a feature that would let users create temporary, digital Apple Pay Later credit cards for individual purchases.
Apple’s new service is still in development and its features could change or be canceled, the people said.
Spokespeople for Apple and Goldman Sachs declined to comment.
On an earnings call earlier on Tuesday, Goldman chief financial officer Stephen Scherr said that he believes there are “more opportunities to be had with Apple.”
Goldman’s alliance with Apple is aimed at helping it find a footing in the world of consumer banking — an expansion it has sought to spread its reach beyond Wall Street.
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