By Senad Karaahmetovic
Apple (NASDAQ:AAPL) announced its upcoming iOS 16 system update will include a Buy Now, Pay Later (BNPL) option known as Apple Pay Later.
Apple users will be able to access the new feature through the Apple Wallet app, where they can opt for the BNPL option when they make a payment using Apple Pay.
The BNPL feature will allow users to split up their payments into four equal parts, which they can then settle over a six weeks period without interest. The user will transact the first payment upfront, and complete the remaining payments every two weeks.
"Apple Pay Later makes it easy to view, track, and repay Apple Pay Later payments within Wallet. Users can apply for Apple Pay Later when they are checking out with Apple Pay, or in Wallet," the company said in its release.
Morgan Stanley analyst Katy Huberty sees the move as “a continuation of Apple's focus on adding personal finance features to the Apple platform, following the 2019 launch of the Apple Card and the March 2022 acquisition of Credit Kudos.”
“The long-term trajectory of BNPL providers remains unchanged: attract consumers that may have more limited access to traditional consumer credit options, and then mature them into more fully established customers, ultimately with a full suite of banking services,” analysts added in a separate memo.
KeyBanc analysts say the new BNPL service from Apple could serve as a broader catalyst for further industry growth.
Apple’s “immense scale as a potential important accelerant for broader industry adoption as we see in-store as a next major leg of industry growth,” the analysts said in a note.