Apple introduces Apple Pay Later
apple.com
apple.com
https://dcurt.is/apple-card-can-disable-your-icloud-account
I refuse to get an Apple Card until they firewall the two and make them independent of each other.
If google shots down your account, you are out of docs, youtube, gmail... This can literally kill your career.
Not to mentions all the "sign up with google/apple" you used.
What it actually says is "If you don't pay your credit card bill, we decline new transactions since you're at your credit limit. If your iCloud uses your Apple Card and that transaction is declined, then your iCloud may be disabled."
"...my bank account number changed in January, causing Apple Card autopay to fail. Then the Apple Store made a charge on the card. Less than fifteen days after that, my App Store, iCloud, Apple Music, and Apple ID accounts had all been disabled by Apple Card."
Wouldn't the same thing have happened if he didn't have an Apple Card, but instead had his credit card decline not only on their Apple subscriptions, but also the MacBook they traded in?
[1] https://dcurt.is/apple-card-can-disable-your-icloud-account
Im frankly surprised AC works this way, all of my interactions with AC support and Apple makesit seem like one wants nothing to do with the other.
Their bank account number changed for reasons unrelated to Apple. That caused their Apple Card monthly payment to fail. Which caused their payments to Apple, for subscriptions and a trade-in, to fail. So Apple cancelled their subscriptions.
Agree the support communication on iPhone versus MacBook is imprecise. But nothing indicates Apple acted improperly or in a manner they wouldn't with anyone else failing to pay for their services.
People have edge cases all the time! Failing gracefully in edge cases is a critical feature for anything that's so deeply wired into your life like a payment processor or a cloud account!
They don't owe you anything if the charge fails. So no-one loses.
If they charge your bank account for a credit card bill that you owe, and it fails, they lose.
The analogy is that if I pay for Netflix with Amex and miss an Amex payment, they can't directly cancel Netflix. Eventually if I continute to not pay, they'll shut down the card and Netflix won't be able to charge and will then cancel themselves, but that's a much more flexible process.
It's always good to have a few "fire breaks" between your most important accounts (email, payments, domains, etc.).
I put 75k or more worth of transactions through my Apple Card in 2022 and I've had nothing but wonderful experiences with the whole thing, including with Apple and Goldman Sachs.
I imagine this is due to some dispute with Mastercard on their fees for credit cards (you can use MC debit at Costco); Visa probably gives Costco a steep discount on fees.
Costco has long had an official credit card and only allowed cards of that brand (whether theirs or not), for a long time it was Amex not Visa.
> Visa probably gives Costco a steep discount on fees.
Right; their single-card-brand partnership agreement is a tool for getting lower credit card processing fees.
Volume rates in general are extremely common.
This combines “volume” with “exclude our competitors”.
0: https://9to5mac.com/2023/02/16/apple-card-future-goldmans-sa...
https://appleinsider.com/articles/23/01/18/apple-card-is-a-d...
> Goldman Sachs spent a lot of money to help launch Apple Card and its other consumer services. A report from January 13 revealed the bank's consumer credit division lost $1.2 billion in nine months last year, and the losses were primarily related to the Apple Card.
> "In the consumer platforms, we did some things right. We didn't execute on some others," Solomon told CNBC on Wednesday. "We probably took on more than we should have, you know, too much, too quickly."
> Goldman helped launch the Apple Card in 2019 and reportedly spent roughly $350 to acquire every new Apple Card customer. And in 2022, it scaled back its efforts to turn its consumer savings business, Marcus, into a fully-fledged digital bank.
> Executives of Goldman's collection of businesses known as Platform Solutions believe its consumer division may break even in 2025, although that target was initially by the end of 2022. However, the bank isn't giving up on the Apple Card.
> "I think we now have a very good deposits business," Solomon said. "We're working on our cards platform, and I think the partnership with Apple is going to pay meaningful dividends for the firm."
Thanks Apple for making tax time just a bit more painful...
AmEx et al never disrespected me thus.
That said, asking for official documentation for a name change seems like standard bank policy. Are there banks that make this easier?
Every other payment card creditor I have will issue me cards with whatever name I ask for on it. The name on the account/statement is irrelevant.
That is indeed ridiculous – what makes that name (not validated with any government documents) more authentic than the one provided later on?
It's a credit card. You tap it and pay for stuff...
given theres no annual fee i don't really see the downside if you buy apple products.
i used to be really into optimizing cash back but it just ends up costing more mindshare than it is really worth.
Smart people don't do loans for a $300 purchase in the first place.
Apple Card offers 2% cash back on all Apple Pay purchases, which... exactly matches my no-fee card from Chase. Except I have to choose how to use the 2% from Chase when it eventually is available, while I can spend Apple's 2% the next day via Apple pay. I threw the metal card in a drawer when it arrived, so if your goal is tell people not to use the physical card, then sure, I'm with you. But I don't think that's the primary use of the card.
Huh? This is public and searchable information. Even ChatGPT 3.5 can give you a comprehensive answer to "what are the best cash back credit cards?"
It seems like your complaint is that people aren't answering a trivial question. This isn't a valid argumentative position.
The apple card's terms are definitely sub-par. Double the cash back would be competitive with say: https://www.fidelity.com/cash-management/visa-signature-card
Cards that do 5% in special categories are also common.
Is this a new version of "google it"?
A. As an AI language model, I cannot recommend a specific financial product, but I can provide some information on what to look for when choosing a cashback credit card.
[Information on what to look for: Cashback, signup bonuses, annual fees, redemption options, and credit score requirements.]
It's possible Bing's AI does better, but I don't use the Edge browser, so I don't know.
Search results are plagued with spam to the point of uselessness, and this is precisely the sort of information I would not trust from an LLM because their sources are, as I said, plagued with spam and I don't want to chase hallucinated results.
In fact, for all that it's a trivial question, this is at least the fourth time I've asked it, and the first time I've gotten real answers--although not from you.
Perhaps the issue is that you don't seen to realize I've never gotten less than 2% from my Apple Card, and I get 3% back from Apple purchases? (Since I just bought an iPad Air + accessories for my daughter's birthday, that alone saved me more than $50!)
The Fidelity card you mention seems to require a Fidelity account, but that's okay, since I have one. However, the terms then seem identical to my experience with the Apple card.
I got my Apple card before Chase updated my cards from them to be tappable, and basically I use the Apple card for Apple Pay (2%) and purchases/subscriptions from Apple (3%), a Chase Amazon card for purchases from Amazon (5%), and a Chase Sapphire physical card (2% or 5%, depending on category) when a physical card is required (rarely these days, but at Walmart for one). It's not clear to me how Fidelity is any better than Apple card in this scenario.
It also seems like you've now changed your story and are explaining all the cards you have which outperform apple's.
You seem really defensive and agitated over this triviality. No one is mocking you for your mistakes. It's just that what you've said doesn't make sense, and is inconsistent. Please, just take it as honest feedback.
My point stands: From the time this card was first announced, people online, especially on this very site, have been dismissing it as having "sub-par" terms, and yet when pushed, all of the alternatives offered up seem to be similar, or even worse.
Of the three credit card bills I (auto-)pay off every month, Apple card has by far the biggest bill, because I use Apple Pay a lot. When I travel to Hong Kong, I love the lack of foreign transaction fees, and still the easy convenience of tap-to-pay with my wristwatch everywhere.
I do have a Chase Sapphire Preferred card that also has no transaction fees--but it costs me $95/year, so I'd judge that to be sup-par compared to Apple's free card, except that I use it to book travel, so the cash back goes farther.
I'll look into the CapitalOne SavorOne that somebody else mentioned, but generally I don't look forward to spending hours of my life comparing nearly-identical credit cards, so I was glad to get some real answers this time!
Citi also has a widely used cash back card for ~2%
I’m actually not aware of any 2% card without any catches (Apple’s being that 2% is only for Apple Pay transactions, which is anything but ubiquitous when shopping online.)
The Bread Cashback Card (American Express)[1] and SoFi Credit Card (MasterCard)[2] give 2% cash back on all purchases with no foreign transaction fees, no annual fees, and no other "catches".
[1] https://www.breadfinancial.com/en/bread-financial-cashback-c...
Apple card only for apple purchases, 0% apr && 3% cashback. I use android phone, so no apple pay possible. I wish it allows to be added to google pay with nfc.
Chase of course goes out of their way to make this as painful as possible. Currently their app is broken and points can't be redeemed for cash. There is also no way to automatically apply all points to a statement credit. My perception that this is the best use of points is reinforced by how much effort they put into trying to convince me to do something else.
This may not be a good redemption. For Chase UR points specifically, you really ought to transfer them to Chase Sapphire Reward card and redeem them for travel ($100 in points becomes $150 in travel) or transfer them to airline/hotel partners for redemptions. For example, you can often find Marriott, Hilton, and Hyatt points redemptions that are substantially better (sometimes more than 50% off) than the cash value of the points.
My last Hyatt hotel stay, I redeemed 8,000 points per night for a hotel room that was listed at $267/night. In cases like this, you can more than triple the value of your points.
For example, CapitalOne SavorOne (3% for many categories) and Wells Fargo Active Cash (2% on all purchases). There are many others that are competitive for specific situations though, including Citi Custom Cash (5% in a single category). Most of these cards also offer an intro APR and/or bonus after $X has been spent.
A flat reward on everything definitely has its appeals. (The Apple Card isn't quite that, though – paying online without Apple Pay only gives you 1% rewards.)
I'll look into the Capital One option, thank you!
Not sure other cards offer the same simple process
The Apple Card's issuer (Goldman Sachs) and payment network (MasterCard) retain just as much transaction information for the Apple Card as they do for any other credit card.[1]
[1] https://www.engadget.com/2019-08-30-apple-card-privacy-adult...
> usually those rates are extremely subject to change, require quarterly activation
That's not true. I'm not aware of any US credit card offering 2% cash back on all purchases that regularly changes this 2% rate or requires quarterly activation for the 2% rate. If you can name even one 2% cash back card that does this, please do.
> variable APR
The Apple Card also has a variable APR. The Apple Card Customer Agreement says that the APR is "15.49% to 26.49% when you open your account" and "After that, this APR will vary with the market based on the Prime Rate."[2]
[2] https://www.goldmansachs.com/terms-and-conditions/Apple-Card...
> high foreign transaction fees
The Bread Cashback Card (American Express) and SoFi Credit Card (MasterCard) manage to offer 2% cash back on all purchases with no foreign transaction fee or annual fee.
Seems predatory towards people who are buying stuff they can't afford, otherwise I don't see how they make money (minus the overpriced laptop I just bought, I guess).
> After the intro period, a variable APR of 19.49%–28.24%
I suppose it isn't an issue if you pay your card off every month, but that's a high APR.
The use case here seems to be people who would not actually be able to pay this off in a month.
the target is uneducated (in the financial sense) consumers who are enticed into making purchases they might otherwise not make (and probably shouldn't make)
Apple probably wants to get at the consumers who are still buying cheap Android phones who will be bowled over by the psychology of splitting the purchase price into installments
I bought my M1 MBP using the financing they offer and it was 24 months, no interest, _and_ you do get the 3% back immediately upon purchase. They also set up the payment plan for you so you do not have to worry about missing a payment and getting charged interest you were intentionally avoiding.
It's a great option if you are on top of your finances, but the point remains that it can easily be used to live outside of your means.
My only catch is this loan requires a soft credit report - I have a freeze on most of my credit scores (used to be there were only 3 now there are a few more). Even a soft pull will hit that barrier.
90% of people are fine with an M1 Air, the last time I went to an Apple store the sales clerk straight up refused to sell me one. He basically told me I didn't know what I was talking about and kept trying to sell me a pro.
I asked him 3 times to sell me an Air, and ended up leaving in frustration. Not before he pitched buying a pro on an Apple line of credit instead.
If I come into a store and tell you what I want to buy, we're not having a conversation. You have no idea what or who I'm buying it for.
Best Buy doesn't do this, I was able to get my Air without an argument and walk out.
If anything, this pay later stuff will make the issue worse. You'll go into the Apple store to be told you might as well get the most expensive thing they have in stock, it's zero down anyway!
I have a Chromebook I bought in 2018 for something like $200, and it's "fine" for gmail, online banking, youtube, and other casual stuff. I have an ssh app on it to use for work, and that's "fine" as well. Most people don't need more than this.
And a windows 11 craptop for $200. These things are absolutely completely insanely cheap.
It's been widely reported on the internet that Apple salespeople are not on commission, which is what makes the OP's story so curious.
Maybe it's changed since the pandemic.
It has also been widely reported that Apple invented USB-C and gave away for free, and All AirPod were sold at cost or at lost.
The No commission thing were from Steve Jobs era for pete sake. How long ago was that?
Depending on regions all Apple retail employees have KPIs. And we are coming close to 10 years since it’s first introduction.
The first clerk disappears, and some kid who is roughly 19 starts lecturing me about how much better the pro is. I politely respond, I just want to buy the Air.
He insists, 'well , do you want to make music '. I respond, 'please sell me the Air'. At this point he's not budging. I ask a final time, and ask why are you making this interaction so difficult.
Him: 'well you're making it difficult'.
I walk out and go to Best Buy. At Best Buy I simply asked to buy an Air, and I was out in 5 minutes.
Now truth be told, if the kid would have told me he needs to push a certain number of pros per month, I might have said okay and brought one. But instead he decided to insult me, I even explained that as a software engineer I knew exactly what I was talking about. I shouldn't need to explain anything when I'm trying to buy a product, it's none of your business if I prefer an M1 air because I routinely dropped my laptops. If it's a gift for someone else, or in reality it does the job I need it to do.
I'm legitimately never going into an Apple store again after this.
I've also heard stories that while you won't get a commission, you may get more perks at work for higher sales numbers.
In any case, your experience at Apple sounds insane.
Employees are judged on warranty sales, and when I worked at Circuit City back in the days when they, uh, existed, we were also judged based on profitability of sales.
Then end up leaving with a 2500$ computer, no big deal it's only 200$ a month.
That said, I hope my comment and the subsequent upvotes make it clear that your experience seems very unusual. I have never felt pressured to buy anything on my numerous visits, and was even talked into buying a cheaper option of two things I considered once, and another time it was suggested I go to Best Buy rather than buy anything from Apple.
They're not paid commission to avoid situations like the one you described, so it's really strange to me that happened. That's all!
So logically you want to push as many people into buying more if you want to sell the financing.
Regardless, the entire point of BNPL is to encourage you to buy more than you need.
Which is why they nag you. I don't really understand this mindset but there's no question it exists. And there's no question the paperclip machine will have its goddamn paperclips.
Probably the 19yr old will eventually get turned into Solyent and replaced with a more polite/savvy version - and you will succumb and buy a pro you don't need just to be nice. And numbers will tick upwards.
Why bother giving the customer what they want if there’s any chance they’d jump for the big one?
I guess that has changed - I also had several strange unpleasant interactions lately. Either difficulty buying something, or annoyance being sold on something more or something else.
People make poor decisions, a lot of people make poor financial decisions, what is a great tool when you're educated is a catastrophe for others
The new wave of "pay later" payment systems is clearly a way to artificially boost consumption in the short term
That's exactly why they're doing this, to get people who can't afford Apple's products to buy them anyway. Compare with what Tim Cook said in February:
> The price of the most expensive iPhone model has increased by more than half — from $962 to $1,600 since 2009 when adjusted for inflation — but Apple CEO Tim Cook doesn't appear worried about increasing prices.
> During an earnings call with investors on Thursday, Cook said he believes people are willing to pay more because the phone has become "so integral into people's lives."
> "I think people are willing to really stretch to get the best they can afford in that category," Cook said, responding to a question on whether the increasing average sales price over the last few years is "sustainable."
"Willing to really stretch" is just another way of saying "spending more than they should".
lol wut. son, spend 10 minutes reading about payday loans, many of the big economic crashes, shady practices by banks, and crypto. fintech isn't a thing, it's just a way to enable already existing behaviors that finance does all the time; it's always been predatory.
> [users want] flexible payment options
Being able to spread some large purchase over multiple pay periods seems like a obvious use case.
But sure, it's exploitative, they want a piece of that already existing cake.
It’s 1000% better
I don't mean to imply that they had an expensive brand and this changes the demographic (I hate businesses like that), I mean their brand, as far as I can tell, is "high quality, thought through, and works well".* This feels like they are exploiting their existing customer base.
* Pls don't argue if you disagree on the actual quality or whatever. This is about how it looks to me that they position themselves. Feel free to argue about how they might be positioning themselves :-)
I have always purchased my phones outright, but am curious if there are fees, interest, or a higher total cost of payments via financing (fees and interest on missed payments).
That's the only justification I could use to say "maybe Steve would be good with it".
This was absolutely a thing before the iPhone. Many carriers offered Blackberries, Palm Treos, and even higher end dumbphones and featurephones at discounts when you signed a service contract.
Same thing here. GS is doing the underwriting, Apple is just providing the tech to be able to access the customer at the point of sale and make a split second automated offer for GS to lend money.
Edit: I was wrong about GS doing the underwriting. The website states:
>Apple Pay Later is offered by Apple Financing LLC, a subsidiary of Apple Inc., which is responsible for credit assessment and lending. Apple Financing plans to report Apple Pay Later loans to U.S. credit bureaus starting this fall,5 so they are reflected in users’ overall financial profiles and can help promote responsible lending for both the lender and the borrower.
The biggest cost to any credit card provider is fraud, which they have to cover. Credit card fraud is $100B+/year. The Apple Card requires an iPhone and by leveraging iOS they can cut down on fraud. This lets them negotiate a better cut of the revenue from Goldman Sachs.
I suspect the iPhone integration even cuts down on fraud when you use the physical Apple Card directly. Leveraging location and activity data from your paired iPhone/Apple ID probably gives them many useful signals for fraud prevention. And you'll notice that Apple seems to have extra logic for detecting jailbroken iPhones when you try to sign up for the Apple Card or add it to your wallet. (App Store and various other Apple services still work, but not the wallet/Apple Card related features when jailbroken)
In 1998, you could finance a G3 iMac with a loan for ~70 months of $29 payments. They also started up a store-only credit card finance option sometime in the early aughts via Barclays.
What's the business model for all these BNPL companies if they have zero fees and zero APR?
Are they counting on some % of users requiring extensions?
Are they getting a % of transaction value as fees?
Yes, this. And it's worth it for the merchant because they make more sales. patio11 has a good article about it: https://www.bitsaboutmoney.com/archive/buy-now-pay-later/
Amazon does the same - you can buy a thing with 0% APR in 6 monthly payments, but you lose your Amazon card 5% cash back.
>BNPLs pitch themselves to businesses as more marketing efforts and less simple payments rails. They’re more expensive than cards by about 300 bps.
I assume this is all the same as Goldman Sachs’ Apple credit card. The same payment fees from merchant to Goldman Sachs, and then Apple might get a little too. Since Goldman is taking all the underwriting risk, I would be surprised if Apple is getting the lions’ share.
Apple’s reward is their devices becoming more popular among people who cannot get credit cards and might find utility in Apple BNPL.
I assume the merchant fees are the same either way.
That would reduce the appeal a little. And that's different than their own-store policy on their card -- if you buy from Apple with an Apple Card on the installment plan, you get the 0% for 12 months or whatever, and you get the 3% cash back too.
Thanks for the 2% comment, by the way. Made me go look, since I only recall it being 1% (for most things). Turns out it's 2% whenever I use my Apple Watch to do the transaction. Works for me!
It's not a lot of credit since you have to pay it back pretty quick, but it does have a similar benefit to paying with a credit card and then paying the monthly statement.
So in return for a high rate (merchant fee for AfterPay here in Australia is 4+%) the merchant gets guaranteed payment and no chargeback risk. The BNPL service makes money on the merchant fees and on the fact that this lending appeals to young people and those with low credit scores.
It's an extension of what used to be called "lay-by" here, but in that case, the merchant wouldn't release the item until it was paid in full.
YES, there is a time and place for financing (especially when interest rates were near zero and you have good impulse control) but the entire "buy now pay later" industry just reeks of preying on people that aren't as financially literate or have little impulse control, and I won't touch the companies with a ten foot pole.
Honestly a bit disappointing to see this from Apple.
I'll amend this by saying that there's also another huge requirement for it to make sense: The new iphone must be necessary for any of this deal to make sense. If it was impulse bought because of this financing offer, then the financing has cost you >$1k
no interest 12/24 month payment tied to apple card.
> Apple Pay users can split purchases into four payments with zero interest and no fees
No of course not. I'm not saying Apple is lying.
> Or you think that they are hoping that you miss payments and then they (a three trillion dollar company) are going to make a material amount of money on an interest penalty?
Maybe? I don't know how much banks make from this kind of thing. That "(a three trillion dollar company)" comment is so irrelevant that it's almost laughable tho. Banks are huge companies too, and they still make money from interest.
Seems like a good deal – Apple is giving away money for free, especially given current interest rates.
I think you should note that for apple, they are splitting payments into 4 over 6 weeks. So your example wouldn't fit the discussion we're having here.
If you actually save your money to only buy things when you can afford them, you can more easily purchase more expensive stuff with cash, since you've already saved up a chunk, and you are also much better prepared for unexpected costs.
Also, most people can't pay for a house upfront. Mortgages are effectively govt-subsidized, so you usually want one anyway. I directly care what the house will cost me per month, and the bid price is only part of that.
Buying a new phone today rather than once I've saved up is a luxury, but buying a replacement phone today rather than being without a phone for ~months while saving up could bring with it significant costs – making it harder to access employment, healthcare, or to socialise. Similar examples would be things like car repairs.
Cash flow is worth something, businesses have known this forever, and people living paycheck to paycheck are typically experts in how to make their money work as well as possible because they're so close to the edge. I trust them that if they think this is the best option for them, it probably is. Payday loans are in the same category here (and businesses call them "commercial paper").
Now, I'd love to live in a society where this isn't necessary, but that's not the world we live in, so I'm in favour of these things being available for those who need them.
When buying a car, or house, or maybe something like a phone that you will use continuously for a number of years, you can make an argument that it's OK to pay for that item over the same time period.
Where people get into more trouble is buying consumable stuff like clothes, food, etc. on to a credit card that they don't pay off every month, and then they end up paying for a box of macaroni or package of underwear over many years (at typically double-digit interest rates).
It's a loan like any other. When used correctly it can be a democratizing function for people who are poor but need important things like phones, fridges, and stoves.
They can't raise prices on the latest iGoodies if no one can afford to buy them.
Buy Now Pay Later can ensure users "can afford" the latest iGoodies instead of having to wait for the price drops on not-the-newest iGoodies.
They are being innovative and enabling their own business to succeed despite the current economic conditions.
Also surprising that the 3% transaction fee on cards has held up for decades; one would expect that competition would bring it down. Instead, it's created an opportunity for all sorts of businesses.
What I like most about this is that the Apple UI makes it dead-simple to see exactly what you spent and what you owe. To my mind, this is the huge benefit of Apple Pay services: instead of mindlessly throwing the card into any slot and getting a shock at the end of the month, you see your status at any time, including what you just bought. I believe this has huge benefits for people living hectic lives to manage their finances.
Apple's ability to win in personal financial services depends on their ability to reduce the errors, friction, and confusion that lead to support calls and missed payments. Unlike banks and cards that depend on a plethora of dark fees that confuse consumers, Apple's gambit is to smooth it out, particularly for the unsophisticated. If Apple can set the standard for the industry, I'm all for it. (Yes, I'm lookin' at you, GE Capital.)
Are services a distraction for Apple? Goodness, Apple is the economic size and complexity of a small country. Rather than dumping money into buying unrelated companies or X-moonshots that only puff egos, Apple management seems focused on incrementally extending the Apple way where it makes sense: to bring goodness to TV and credit cards and underserved markets, to tax their supply chains with best practices, etc. I wouldn't do it any differently.
My big concern with using some of these "pay later" types of services is that it seems incredibly risky to your credit score even if you do everything right and pay it off on time.
If Apple or anybody else can clarify on this point, that would be great. Otherwise, I'd never touch this.
That essentially lowers your credit card limit by the payment amount for the lifetime of the loan.
If any single payment fails, they will then try and go for the remainder.
Couldn't using this reduce the average age of your accounts, which is a big factor in credit score calculation?
But I'm with you, I don't see it as a big deal. I routinely take advantage of the 'no interest installment plan' for my Apple toy purchases on my Apple card. Why wouldn't I want to hold off on giving them my money for as long as possible, especially in an inflationary environment?
I don’t typically finance anything I can’t afford to buy outright. I just like to feel like I have extra breathing room in the case of some emergency.
BNPL usually don't target these people.
In the best case, these are pointless services that only transfer money to the finance industry. In the worst case, they incentivize people to spend money on things they can’t afford (and also transfer money to the finance industry).
If you pay a credit card in full, you also don't pay interest, and you usually get at least a month to do so as well.
If you don't pay on time, though, you lose big – with both credit cards and BNPLs.
So you basically have to start paying early, every 1.5 weeks. This seems worse than credit cards where you don't have to pay it up to like 60 days later.
It also seems strictly worse for users than other BNPL's like Affirm where many purchases can be paid over the coarse of several months or years.
https://www.howtogeek.com/778355/new-study-says-87-of-us-tee...
I can obviously understand why it makes sense from a strictly money point of view, but what is the business strategy against this? All I can think of is pushing a brand message that is explicitly anti-debt and builds its reputation on treating its community of customers well.
If they are going to focus on services, they should make them best in class. I expect best in class software, but Apple Music still doesn’t have anything like Spotify Connect and it is still incredibly slow and unreliable software (for what it is).
I don’t understand how tarnishing the premium brand with BNPL is worth it long term. And I especially don’t understand how all of their 0% interest offers will make sense in a world of 5+% interest rates.
- Computers
- Tablets
- Headphones
- AR headsets
- Cars
- Watches
- Streaming boxes
- Speakers
- Video streaming subscriptions
- News aggregation
- Fitness routine subscriptions
- Music streaming subscriptions
- Video game subscriptions
- eBooks
- Apps
- Cloud storage
- Credit cards
- BPNL
is completely beyond me. Yes there's stuff in there they haven't announced. Yes there are a lot of accessories and services not listed.
I'm probably a Microsoft shill at this point, but I am a .NET dev running Windows and I have a Microsoft 365 family subscription and bought an Xbox. All of my hardware is from other manufacturers. My finances are not tied to MS. I can't think of another company that has gotten the amount of blind trust that Apple has.
For users of a reward card, this alternative probably isn't that useful. I'd miss out on 2% cash back, and the zero-interest period is only 6 weeks, which is just a couple weeks longer than the zero-interest period on a credit card (which bills you once a month, effectively giving you 0-4 weeks of zero-interest). I can see how it could be good for younger folks who need to build up credit and can use this to do so responsibly.
> 4. Upon purchase, a user’s Apple Pay Later loan and payment history may be reported to credit bureaus and impact their credit.
What? Doesn't that footnote directly contradict the text that references it?
Typically what people worry about are the cost of a hard pull when applying for credit. Apple is saying they will not do a hard pull
For example, you use Apple BNPL, and then in a couple years you go to buy a house, and they see that you use a BNPL service, and so their underwriting classes you as a higher risk and you could end up paying 100bps more on a mortgage.
But the wording on Apple's website is fine since the whole claim is technically true:
>Users can apply for a loan within Wallet with no impact to their credit.
It seems like many of them act like credit cards and charge the merchant a percentage, since they “drive consumption” and encourage people to buy stuff. Of course, this fee will likely be added into the price that all consumers pay, so as these get bigger, we all will be subsidizing interest free loans to people in the form of 1%-3% higher prices. Much like credit cards are today.
The commercials for Apple Pay have me thinking the exact opposite.
* People with good credit don't need to manage their monthly credit payment. They simply pay it all off.
* People with good credit also don't really need to apply for an emergency credit card (unless they happen to forget their wallet).
My impression is many of these products are akin to loan sharks. They loose/break even on "good" borrowers, but make loads on people who are "so close" to being able to fully repay.
It also allows the sellers to increase their prices or even simply upsell without pricing out their own consumer base.
The value proposition to me seems to be that they sold a bike at 3500$ they would not have sold otherwise and they can deal with the payment being made over time rather than all at purchase time.
For the user the value proposition is that value adding purchases like this can be made and paid off while they provide value.
I might have expressed this poorly, but it wasn’t an “investment in the future”. And that’s exactly what made it interesting. The monthly costs where lower immediately, since the cost of transport which was saved was higher than the monthly cost to pay for the bike. It was just a straight up cost reduction due to the structure of the payment. Had the zero interest monthly payments not been available then it would have been the more typical “investment/ROI over time” situation, and there might be an argument for it still being beneficiary to go into debt to make the purchase because over the long run it would pay of again. But the payment structure just makes everything a thousand times simpler.
So in addition to the soft pull requirement, it's clear this is almost exclusively targeted at people with good finances.
Not being able to use a credit card is a huger bummer though. Buying something like a macbook pro is a decent way to meet the minimum on a credit card with a signup bonus if you're not a high rolling spender normally.
Same way like you cannot pay your mortgage with a credit card.
For example if there's a large purchase one needed to make and had the cash on hand for, wouldn't it be smarter to let most of that cash accrue some interest in one of the many 4%+ interest savings accounts now available while making payments on the 0% interest BNPL?
The average maturity date on Apple (and others) BNPL is 3 weeks. Credit cards have a minimum payment deadline of 3 weeks from the statement without accruing interest, and on average you'll get another 2 weeks on top of that depending on when in the cycle you made the purchase. So you're getting at least the same average time to accrue interest, plus you're getting credit card rewards of 1-5%.
This is for people who cannot get approved for a credit card.
Having a set of monthly rent/utility costs is fine, cause they aren't particularly volatile.
Credit card microloans are also fine because they are all managed under 1 balance.
Saturday Night Live had it spot on years ago: https://youtu.be/R3ZJKN_5M44
Oh lord won't you buy me a Mercedes-Benz. My friends all drive Porsches, i must make amends...
To me this seems like a recipe for trouble, I'll stay away from it.
There's also a part of my brain that jumps to: "if you missed a payment, would they just lock you out of your laptop by some remote command?", though there is no indication of this, and it seems unlikely (as of now).
USA is bad but not the worst, this is a global plague
The other reply to your comment is pretty instructive. There appears to be a positive correlation between how wealthy a country is and how high the household debt load is.
sad that Apple has had to resort to "financializing" their own customer base
I don't see anything surprising or new about this other than that Apple has an easier way of managing that loan than a book of paper that you ripped one out each month and sent it in along with a paper check.
> Apple Pay Later is offered by Apple Financing LLC, a subsidiary of Apple Inc., which is responsible for credit assessment and lending.
#1, no, I don't want to spread my $50 worth of sushi out over 4 months
#2, if you do need to do that, maybe you shouldn't be ordering from Uber eats?
It seems extremely parasitical. I'm equally bothered that these companies are doing this and that some consumers feel the need to do this (and think this is a good idea)...