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Issue link: https://digital.macdirectory.com/i/1476669
This relationship has been in place since 2019, with Goldman Sachs also acting as a partner for the Apple credit card (although Pay Later is not tied to the Apple credit card). This strategic partnership has helped Apple gain strong footing in the world of consumer finance. Challenges for consumers The reality is that the world of unregulated finance, which includes buy now, pay later, does not bode well for all customers. Younger demographics (such as Gen Z and Millenials) and low-income households can be more vulnerable to the risks associated with using these services – and can rack up debt as a result. Purchases through buy now, pay later schemes may also be driven by a desire to own the latest gadgets and luxury goods – a message pushed onto consumers through slick marketing. They can condition consumers to make purchases without feeling the pain of parting with cold, hard cash. From a consumer psychology perspective, these services encourages immediate gratification and put younger people on the consumption treadmill. In other words, they may continually spend more money on purchases than they can actually afford. Missing payments on Pay Later would negatively impact an individual’s credit rating, which can then have adverse outcomes such as not qualifying for traditional loans or credit cards. A focus on consumerist behaviour can also trigger an “ownership effect”. This is when people become attached to their purchases and are unlikely to return them, even if they can’t afford them. Apple’s technology-driven and consumer-centric marketing gives it an edge over other buy now, pay later schemes. It claims the service is designed with consumers’ financial health in mind. But as is the case with any of these services, consumers ought to be aware of the risks and manage them carefully.