New iPhone Buy Now Pay Later button in iOS 16 takes on Affirm and Amazon: How it works

This story is part WWDC 2022CNET’s full coverage from and about Apple’s annual developer conference.

What is happening

Apple has announced a new free funding feature in Apple Wallet that lets you pay for your purchases for free over time.

why is it important

As inflation continues to impact households, “buy now, pay later” services have become a popular payment option, and Apple’s entry will likely become a major player.

And after

Apple Pay Later will launch with the release of iOS 16, scheduled for September 2022.

Short-term installment loans called “Buy now, pay later” The services offer consumers an easy way to repay their purchases over time, usually without fees or interest. At this week Worldwide Developers ConferenceApple has announced its own buy now, pay later product, Apple Pay Later, which will officially launch with the release of the new iOS 16 for iPhone in September. As a new feature in Apple Wallet, Apple Pay Later will allow you to split the cost of certain goods and services into four payments over six weeks at no cost.

Apple Wallet is the iPhone’s digital wallet application that provides three main services: Apple Pay, Apple Card and Apple Cash. Apple Pay lets you store debit and credit cards and make purchases online or at businesses; Apple Card is a credit account issued by MasterCard and Goldman Sachs that works like a standard digital credit card; and Apple Cash enables peer-to-peer payments.

Apple’s foray into free funding comes at a time when many retailers are accepting payments from BNPL apps such as Affirm, Klarna or Afterpay. Most of these apps offer similar short-term interest-free payment plans, while others also offer longer installment plans with varying interest rates.

We’ll share everything there is to know about Apple Pay later in this article, including how it will work, where it will be accepted, and when it will be available. Apple unveiled Pay Later and iOS 16 alongside new versions of his MacBook and iPad. Here is everything Apple announced at WWDC.

How does Apple Pay Later work?

Apple Pay Later lets you split 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 thereafter.

Once Apple Pay Later is released, you’ll have two options when completing a purchase: Pay in Full and Pay Later. Selecting the latter option will bring up a payment schedule showing the amount of each of the four payments and the date they are due.

According to Corey Fugman, Senior Director of Wallet and Apple Pay, who spoke about Wallet during the WWDC keynote, Apple Pay Later will be available “wherever Apple Pay is accepted, in apps or online,” indicating that the service may not be available for purchases made in physical stores.

Stores and merchants won’t have to implement changes to accept payments through Apple Pay Later. Transactions will occur as before – the only difference will be how back-end payments are made.

MasterCard payments – the credit card company’s white-label BNPL service – will provide merchant payments for Apple Pay Later. Apple and banking partner Goldman Sachs launched plans for Apple Pay Later in July last year, according to Bloomberg.

When can I use Apple Pay Later on my iPhone?

Apple Pay Later will be included with iOS 16, Apple’s next scheduled operating system update for iPhone. The iOS 16 beta is already available for developers who have an account. In the WWDC keynote, Apple said the first public beta of iOS 16 will be released in July.

Apple has traditionally released its latest operating systems to the public alongside its latest phones, as it did with iPhone 13 and iOS 15 in September last year. iPhone 14 is expected to be released in September this year, and iOS 16 is likely to be released around the same time as well.

How is Apple Pay Later different from Apple Card monthly payments?

Apple Card Monthly Payments is an Apple program that allows you to finance the purchase of some Apple products when using the Apple Card credit card. The length of the 0% APR period for these purchases depends on the product. Installment plans range from six months to two years.

Apple Pay Later is not limited to Apple products nor does it require the use of Apple Card. With Apple Pay Later, you’ll be able to fund purchases using a debit card, Apple said, as long as it’s connected to Apple Wallet. Additionally, 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 else is new in Apple Wallet for iPhone?

Another new Apple Wallet feature announced at WWDC is Apple Pay order tracking, which allows merchants to provide customers with detailed receipts and delivery statuses for products purchased through Apple Wallet.

Apple also announced expanded support in Apple Wallet for driver’s license and identity cards. Next Colorado and Arizona IDsApple Wallet plans to add support for 11 more states in the near future.

These driving licenses can be used at certain Transport Security Agency checkpoints. They can also be shared with other apps that require identification, such as alcohol purchases through Uber Eats.

Apple Wallet is also adding key sharing support for locations like hotels, offices, or automobiles. New features will allow users to share keys with friends or associates using email, text messaging or other messaging apps.

Like Apple Pay Later, Apple Pay order tracking, driver’s license and key sharing features will be made available to the public with the full release of iOS 16, due in September 2022.

What other online services allow you to buy now and pay later?

Some existing online payment systems offer short-term “buy now, pay later” financing similar to what Apple Pay Later offers. PayPal’s Pay in 4 program works very much like Apple Pay Later, except purchases are limited between $300 and $1,500.

BNPL App Sezzle also uses a four-payment over six-week system, but allows users to defer one payment up to two weeks later at no cost and to defer other payments for an additional fee.

Other BNPL applications such as To affirm and Klarna offer interest-free installment plans for short periods or longer installment plans that add a variable interest rate.

For more WWDC coverage, read more about the macOS Ventura coming soonNew fitness and workout features for the Apple Watch and all the new features announced for Apple Maps.

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