iOS 16’s new Apple Pay option lets iPhone users buy now and pay later: How it works

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

What is going on

Apple has announced a new free financing feature in Apple Wallet that allows you to pay for purchases over time for free.

Why it matters

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

What’s next

Apple Pay Later will launch with the release of iOS 16, expected in September 2022.

The upcoming release of iOS 16 for iPhone makes Apple one of the bigger players in the “buy now, pay later” room. BNPL services allow you to spread the cost of your purchases over multiple payments made over a relatively short period of time, usually without fees or interest. Apple last week announced the launch of its own service, Apple Pay Later Global Developer Conference

Apple Pay is part of Apple Wallet, the iPhone’s digital wallet app that also: Apple Card and Apple Cash† Apple Pay lets you store debit and credit cards and make purchases online or from 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 financing with Apple Pay Later comes at a time when many retailers are accepting payments from BNPL apps like Affirm, Klarna and Afterpay† Most of these apps offer similar short-term interest-free payment plans, while others also offer longer-term plans with variable interest rates.

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

How does Apple Pay Later work?

With Apple Pay Later, you can 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 will have two options when completing a purchase: Pay in Full and Pay Later. Selecting the latter option displays a payment schedule showing the amount of each of the four payments and when they are due.

According to Corey Fugman, senior director for Wallet and Apple Pay, who spoke about Wallet at the WWDC keynote addressApple Pay Later will be available “anywhere Apple Pay is accepted, in apps or online,” indicating that the service may not be available for purchases in brick-and-mortar stores.

Stores and merchants don’t need to make any changes to accept payments through Apple Pay Later. Transactions will take place as they did before – the only difference will be how back-end payments are made.

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

When can I use Apple Pay Later on my iPhone?

Apple Pay Later ships with iOS 16, Apple’s next planned operating system update for the iPhone. The iOS 16 beta is already available to developers who have an account. In the WWDC keynote, Apple indicated that the first public beta version of iOS 16 will be released sometime in July.

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

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

Apple Card Monthly Installments is an Apple program that allows you to purchase certain Apple products when using the apple card credit card. The length of the 0% APR period for these purchases varies by 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 the Apple Card. With Apple Pay Later, you can fund purchases with an Apple-specified debit card, as long as it’s connected to Apple Wallet. Also, the interest-free term for Apple Pay Later – six weeks – is much shorter than the payment plans offered by Apple Card Monthly Termments.

What else is new in Apple Wallet for iPhone?

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

Apple has also announced extended support in Apple Wallet for: driving licenses and identification cards. Next Colorado and Arizona IDsexpects Apple Wallet to add support for an additional 11 states in the near future.

These driver’s licenses can be used at selected Transportation Security Agency checkpoints. They can also be shared with other apps that require identification, such as alcohol purchases through Uber Eats.

Apple Wallet also adds support for key sharing for locations such as hotels, offices, or cars. New features allow users to share keys with friends or co-workers via email, SMS 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, expected in September 2022.

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

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

BNPL app Sezzle also uses a system of four payments over six weeks, but allows users to move one payment up to two weeks later at no cost and defer further payments for an additional fee.

Other BNPL apps like To confirm and Klarna offer interest-free repayment plans for short periods, or longer repayment plans that add a variable interest rate.

To learn more about WWDC, read about the: upcoming MacOS Venturanew ones fitness and training features for the Apple Watch and all the new features announced for Apple Maps

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