The announcement of Apple Pay Later has made waves in the Buy Now Pay Later world, with some suggesting that existing companies like Affirm are going to be hard hit. But some are fighting back …
Background
Buy Now Pay Later (BNPL) is a term for schemes which let you make a downpayment on a product and take it home the same day, paying off the balance in regular installments. Some are interest-free, while others attract interest payments.
Some store chains have offered these schemes for decades, but app-based BNPL schemes which can be used for any purchase have recently taken off.
The Apple Card already offered a BNPL feature for purchases of Apple products, allowing interest-free payments over up to 24 months. But at WWDC 2022, the company announced Apple Pay Later, which doesn’t require the card.
This lets you pay in installments simply by choosing the option in the Wallet app when you make payment. You can pay in four equal installments, and get up to six weeks interest-free. Payments are managed through the Wallet app, so you can manage your budget.
The best thing for retailers and developers alike is that Apple Pay Later ‘just works’ – there’s nothing they need do to implement it.
Paypal boosts Buy Now Pay Later program
Paypal already offered a range of BNPL deals, including Pay in 4, which is essentially the same as Apple Pay Later: four equal payments over six weeks, with no interest or late fees. Engadget reports that the company is now offering longer-term payment plans, of up to two years.
PayPal is expanding its buy now, pay later options with a longer-term payment plan. The company has enabled users to cover the cost of a purchase over a few interest-free payments and it also offers credit cards. Pay Monthly, which is issued by WebBank, is another option for folks in the US.
It’s valid for purchases between $199 and $10,000. The cost will be split across monthly payments of between six and 24 months. If you select the Pay Monthly option at checkout, you’ll then need to complete an application. Should that be approved, you’ll be able to select from three payment options with different time frames. APR is calculated on a risk basis and will be between zero and 29.99 percent. The first payment is due a month after purchase.
Unlike Apple Pay Later, however, retailers have to sign up.
PayPal says millions of retailers will support Pay Monthly — including Samsonite, Fossil and Advance Auto — and that purchases will be eligible for PayPal Purchase Protection.
However, the company says that it will be automatically available to all merchants at no additional cost, so it’s likely that many will offer it.
With all these schemes, consumers are cautioned to ensure that they can repay within the agreed terms. Although there are no late fees with many of these programs, failure to repay on time will still impact your credit rating. They can also encourage unwise spending.
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.
It’s not the first time PayPal has responded to a move by Apple.
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