Apple is teaming up with Goldman Sachs to build an “Apple Pay Later” installment service. First reported by Bloomberg, this service will allow Apple Pay users to finance any purchase within a two-week interest-free period or a months-long period with interest—no Apple Card required.
If this service sounds familiar, that’s because it mimics other installment programs like Affirm and PayPal’s Pay in 4. Just as these services pop up while you pay for products online, Apple Pay Later will appear whenever you purchase items in-store or online using Apple Pay. It may encourage iPhone owners to use Apple Pay more often, even if they don’t use Apple for banking.
The two installment programs offered by Apple Pay Later are called “Pay in 4,” which requires four interest-free payments across a two-week period, and “Pay in Monthly Installments,” which stretches purchases into several monthly fees with interest. Apple will allow you to finish paying for a product before the installment period is over, which could help users avoid a few months of interest depending on which plan they choose.
We don’t know how much interest Apple will tack onto its monthly installment plan, but competing services charge anywhere between 20% and 30%. This is somewhat troubling, as young people who have no experience with loans or debt may be attracted to Pay Later’s ease of use and “not-a-credit-card” guise, only to get hit with unexpectedly large fees.
Of course, Apple will hide Pay Later behind an application process, which may keep out young people and those with poor credit. The only thing we really know about this application process, though, is that it will require state ID.
It’s worth pointing out that some credit cards, like those from American Express, have built-in financing features with fixed fees or interest rates. If you’re interested in Pay Later, you may want to look into these credit card-based alternatives first, as they may be cheaper than Apple Pay Later, Affirm, or other installment services.