Apple Pay introduces Pay in 4

Apple Pay is the latest major payment platform to offer customers a buy now pay later option when they make a purchase - Apple Pay in 4. Users can now split purchases into four payments and pay no interest or fees. The balance will be repayable over a six-week period.

Apple announced that customers could apply for a loan of between $50 (£40) and $1,000 (£800). The application will be online or can be conducted in the Apple Store.

Customers can use the loans for online and in-app purchases when the transaction happens on an iPhone or iPad. Apple has started to invite selected users to access a pre-release version of Apple Pay Later. They say it will be available to all eligible users in the months ahead.

Apple will begin inviting select users to access a pre-release version of Apple Pay Later, with plans to offer it to all eligible users in the coming months.

Applications and loans will not affect credit scores. However, before loan approval, Apple will conduct a 'soft credit pull' to verify the affordability for the applicant. It will be an inbuilt feature in the Apple Pay wallet - meaning that users can see their loan balance in one secure place. 

Once the users are approved for the loan, they will see a Pay Later option on Apple Pay at online and in-app checkouts on iPhones and iPads. This can then be used to make the purchase.

Since its introduction, Apple Pay has become an incredibly popular way for customers to pay for goods on and offline. Wallet keeps all card details securely stored in one location, meaning it is possible to go shopping without having to take any physical cards or cash with you.

Whether online or in-store, more and more people choose Wallet as their go-to payment option. There seems to be no end to the variety of uses, from tickets for London transport and National Rail to in-app entertainment purchases and being able to bet with Apple Pay, it has become a part of our everyday lives.

The new Apple Pay in 4 feature is in direct competition with PayPal and Klarna, who have been running these schemes for a while. The global buy now pay later market has grown from $15.91 billion in 2021 to $22.86 in 2022. It is projected to be worth $90.51 billion by 2029.

With inflation forcing the cost of living ever upward in the United Kingdom, more shoppers are turning to BNPL schemes to manage cash flow. It is reported that over 36% of consumers have used it more than once. Rising inflation and cost of living increases are cited as the main reason for use. In addition, it is simple and available, so this makes it attractive.

Millennials and Gen Z are the most likely shoppers to use this payment method. However, more recognised names like Apple coming into the market will almost certainly drive usage amongst older users.

Apple Pay Later will work through the Mastercard Instalments programme. Merchants that take Apple Pay will not need to make any changes to be able to accept the new BNPL version. The option will simply be an option for their customers during checkout on iPhone and iPad.

BNPL is used across all product categories. It is most used when consumers buy electronics like smartphones, TVs and computers. It is also popular for fashion, clothing, home improvements and health and beauty products.

The competition in the BNPL has increased significantly in recent years. Klarna was one of the earliest arrivals and is now looking at ways to gain a competitive advantage by offering more than just a payment scheme. They launched a search and compare tool within their app to help consumers in the UK find the best deals.

Apple Pay, therefore, enters an already busy and established market. Existing operators include Klarna, Clearpay, Laybuy, Payl8r, Openpay, PayPal, Zilch, Playter Pay and Zip. It will be interesting to find out if Apple Pay Later is an innovator or a follower – we will not have to wait long to see.