Apple Pay Later Lets You Finance Purchases Up to $1,000: How It Works
The buy now, pay later option is open to "select users." Here's everything to know before trying it.
Peter ButlerSenior Editor
Peter is a writer and editor for the CNET How-To team. He has been covering technology, software, finance, sports and video games since working for @Home Network and Excite in the 1990s. Peter managed reviews and listings for Download.com during the 2000s, and is passionate about software and no-nonsense advice for creators, consumers and investors.
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Apple joined the buy now, pay later game this week. A "prerelease version" of the long-awaited Apple Pay Later service is now available for "select users." The company didn't specify which users or how many, though it says it "plans to offer it to all eligible users in the coming months."
Originally, Apple Pay Later was supposed to roll out at the end of 2022, after it was announced at Apple's WWDC event last year. However, the product's launch was delayed due to "significant technical and engineering challenges," per Bloomberg.
Apple's new payment service comes at a time when many retailers are accepting payments from BNPL apps such as Affirm, Klarna and Afterpay. Here's what you need to know about the payment plan, how it works and when it will be open to all iPhone users.
Apple Pay Later lets you break the cost of purchases into four equal payments spread over six weeks. The first payment is due when you make your purchase, and the remaining payments are due every two weeks after that.
Once Apple Pay Later is set up on your phone, you have two options when completing a purchase: Pay in Full and Pay Later. Selecting the latter option will bring up a payment schedule displaying the amount of each of the four payments and when they'll be due.
Stores and merchants don't have to implement any changes in order to accept payments through Apple Pay Later. Transactions occur as they did before -- the only difference will lie in how back-end payments are made. Apple Pay Later will work with any merchants who accept Apple Pay.
MasterCard Installments, the credit card company's white-label BNPL service, is providing the merchant payments for Apple Pay Later. Apple has created its own financial subsidiary -- Apple Financing -- that handles loan approvals and credit checks. Banking partner Goldman Sachs is the official loan issuer.
Payments for Apple Pay Later must be made with a debit card; you can't use a credit card. You can set up automatic payments or make additional payments at any time. Each BNPL purchase will be reviewed and approved or rejected using a soft credit check.
Apple Pay Later has no plan to charge fees for late payments, though it may use late payments as an excuse to reject future BNPL loans. The minimum purchase for Apple Pay Later is $50; the maximum is $1,000.
When can I use Apple Pay Later on my iPhone?
If you're one of the "select users" to receive an invite from Apple, you can start using Apple Pay Later now. For the rest of us, based on the wording in Apple's press release, Apple Pay Later will likely be enabled for all Apple Wallet users in a future update to iOS.
Apple has already released four point upgrades since iOS 16 launched in September 2022. The first update -- iOS 16.1 -- came in October 2022; the second -- iOS 16.2 in December 2022; the third -- iOS 16.3 -- in January 2023; and the fourth -- iOS 16.4 -- in March 2023.
Based on that bimonthly release schedule, all Apple Wallet users can probably expect access to Apple Pay Later some time in May 2023.
How is Apple Pay Later different from Apple Card Monthly Installments?
Apple Pay Later isn't restricted to Apple products, nor does it require the use of the Apple Card. With Apple Pay Later, you can finance any purchases from $50 to $1,000 using a debit card, as long as it's connected to Apple Wallet. Also, the interest-free installment period for Apple Pay Later -- six weeks -- is much shorter than the payment plans offered by Apple Card Monthly Installments.
What other Apple Wallet features were added in iOS 16?
One new Apple Wallet feature that launched with iOS 16 is Apple Pay Order Tracking, which adds the ability for merchants to provide detailed receipts and delivery statuses for purchased products to customers via Apple Wallet.
These driver's licenses can be used at select Transportation Security Agency checkpoints. They can also be shared with other apps that require identification, such as alcohol purchases through Uber Eats.
Apple Wallet has also added support for sharing keys for locations such as hotels, offices or automobiles. New features let users share keys with friends or associates using email, text messaging or other messaging apps.
What other online services let you buy now and pay later?
BNPL app Sezzle also uses a system of four payments over six weeks, but permits users to reschedule one payment for up to two weeks later at no cost and postpone further payments for an additional fee.
Other BNPL apps such as Affirm and Klarna offer interest-free installment plans for short periods, or longer installment plans that add a variable interest rate.