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Issue link: https://digital.macdirectory.com/i/1476669
Apple has joined the thriving “buy now, pay later” industry, with a customised service called Apple Pay Later. The service was announced earlier this week at the 2022 Worldwide Developers Conference, and will initially be launched in the United States later this year. Pay Later will be built into the Apple Wallet and eligible for use on any purchase made through Apple Pay. Customers will be able to split the cost of a purchase into four equal payments, with zero interest and fees, spread over a period of four months. To qualify, however, Apple will first do a soft credit check on users wanting to use the service. The technology behemoth claims it has designed the feature with “users’ financial health in mind”. It’s likely Apple is trying to consolidate its foothold in the world of consumer finance, and increase its profitability. And consumers should be aware of the risks of using such a service. Apple: the consumer darling With the launch of Pay Later, Apple will be competing with many other similar fin-tech companies including PayPal, Block, Klarna and AfterPay – some of which saw their share prices fall following Apple’s announcement. Apple will benefit from its huge market and brand power, with the capability to attract millions to its products and services. And with an acute focus on customer experience, Apple has managed to foster a community of evangelists. There’s no doubt the company is a consumer darling. Moreover, Apple has established an ever-growing ecosystem in which users are encouraged to tap into Apple products and services as much, and as often, as possible – such as by making payments through their iPhone instead of a bank card. The tech giant provides ways to integrate once-separate computing capabilities into a phone or wristwatch – while keeping the consumer’s experience in focus. Pay Later enhances this customer-centric experience further. It’s one more way users can integrate the tools they need within a single ecosystem.What’s in it for Apple? Apple stands to make financial gains through Pay Later, thereby adding to its bottom line. Currently its reach in the retail world is evident, with iPhone-based payment services accepted by 85% of US retailers. One 2021 survey found that about 26% of regular online shoppers in Australia used buy now, pay later services. As Apple’s customers increasingly start to use the Pay Later service, it will gain from merchant fees. These are fees which retailers pay Apple in exchange for being able to offer customers Apple Pay. In addition, Apple will also gain valuable insight into consumers’ purchase behaviours, which will allow the company to predict future consumption and spending behaviour. To deliver the buy now, pay later service, Apple has joined forces with Goldman Sachs, who will finance the loans.