APPLE ROLLS OUT BUY NOW, PAY LATER SERVICE, WITH GUARDRAILS

Apple is getting into the buy now, pay later space with a few tweaks to the existing model — including no option to pay with a credit card.

The company will roll out the product to some consumers this spring, and will begin reporting the loans to credit bureaus in the fall.

Here’s what you need to know.

Since the start of the pandemic, the option to “buy now, pay later” has skyrocketed in popularity, especially among young and low-income consumers who may not have ready access to traditional credit.

If you shop online for clothes or furniture, sneakers or concert tickets, you’ve seen the option at checkout to break the cost into smaller installments over time. Companies like Afterpay, Affirm, Klarna, and Paypal already offer the service, typically with late fees for missed payments and the option to use a credit card or bank account to make installment payments.

Apple’s version, which is integrated with Apple Pay and facilitated by MasterCard, will require the consumer use a debit card and a bank account to make those payments, the company said, and will not charge flat or percentage late fees. Instead, missed payments will eventually result in the consumer losing access to these kinds of loans.

Apple said its buy now, pay later product will also offer fraud and consumer protections through MasterCard’s existing pay-by-installment model, and will charge merchants fees that “are competitive to other installment products in the market,” according to Mastercard spokesperson Raul Lopez.

HOW DOES BUY NOW, PAY LATER WORK?