Will Buy-Now-Pay-Later be Too Easy in iOS 18? Are Consumers at Risk?
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We recently wrote about Apple’s decision to shutter Apple Pay Later, the company’s buy-now-pay-later (BNPL) service that was integrated into Apple Wallet.
As the name suggests, Apple Pay Later gave users the option to “Pay Later” when completing a transaction using Apple Pay. The built-in BNPL service could divide nearly any purchase of up to $1,000 into four installments, with the first paid at the time of the transaction. The remaining three payments were made in two-week intervals over the next six weeks, without interest or fees.
Apple is shutting down Apple Pay Later partly because iOS 18 will open the doors to third-party BNPL services. However, this could also pose a serious risk to consumers. In iOS 18, consumers will be able to access installment loans offered through a combination of credit cards, debit cards, and lenders. Apple is also partnering with popular BNPL provider Affirm to allow US consumers to easily apply for a BNPL loan with Affirm at checkout.
Apple plans to essentially open the BNPL floodgates with iOS 18. This means users will be able to select from any number of BNPL options at checkout. This could create a slippery slope for those who aren’t careful and tend to shop above their means.
BNPL providers often perform a soft credit check which does not appear on a consumer’s credit profile. Therefore, other lenders wouldn’t necessarily have an accurate picture of the customer’s creditworthiness as consumers pursue additional BNPL loans. BNPL providers also aren’t required to report loans to the credit bureaus like Equifax. This model poses a substantial risk to consumers, given the opportunity to abuse BNPL opportunities and to lenders, given the potential for loans given overextended borrowers going unpaid.
In the past, state attorneys general have likened BNPL services to predatory lending. Since so many consumers lack financial literacy, additional BNPL options available via Apple Pay could have serious financial consequences for consumers and lenders alike.
Remember, free money isn’t free. Be careful not to overuse BNPL options when using Apple Pay. You’re likely to see many services competing for your business. Don’t fall into the trap. Educate your family and friends about the dangers of BNPL so they don’t fall behind with payments and get hit with excessive fees.
