Apple Pay Later: What Are the Crazy Ones Up To?
softwareplatform.net
softwareplatform.net
But yes, these plans (usually deferred interest) are designed to exploit people who are bad with money. They also usually go out of the way to hide how much you're racking up in order to maximize gain. This kind of person thinks "What's another $1000" when their bill is already at $4000. Furniture stores are infamous for this.
Well, only if you can earn more over 12 months than the asset you bought depreciated. I think a better way to look at it is that you can earn a small discount.
As a result, depreciation can be written off, I think, since I would argue if you do buy it and keep it you’ve gotten value from it even if it isn’t cash.
https://scholarship.law.unc.edu/cgi/viewcontent.cgi?article=...
https://www.consumerfinance.gov/about-us/newsroom/cfpb-study...
https://files.consumerfinance.gov/f/documents/cfpb_buy-now-p...
https://www.sfgate.com/news/article/influencers-lead-Gen-Z-i...
https://www.cnn.com/2022/07/06/economy/buy-now-pay-later-bnp...
https://www.cbinsights.com/research/report/buy-now-pay-later...
(disclosure: I have submitted public comments to various regulators on the topic)
Was totally a no brainer, and a no brainer.
And if you do that with all your stuff (after all, why stop at your phone) your finances will be hella complicated. With all sorts of repayments being deducted at different days of the months, starting and finishing over time. I wouldn't want that. It's seems easier but it makes things more complicated.
You can save money buying something, which in a spreadsheet may look the same but is very different.
However, they have changed the details in recent years. Prior to this it was an ordinary financing account. But now it is a Best Buy credit card account with a limit equal to the purchase price. This means that in the 1st month of the offer, you're at 100% utilization on that card. And this hurts your credit score. Not to mention it now has an annual fee with an interest rate potentially as high as 31.49%. And this is just too risky. Save your money, then buy what you want.
As another example, it allows you to purchase a new laptop while selling your old one, such that you don’t hVe time without one at all.
People are going to buy a new iPad whether Apple gives them an easier way to do it or not; the difference is with Apple’s Pay Later they’re only on the hook for the cost of the device, and not additional interest monthly on top of that.
And iPads are very resellable.
What are you talking about?
The point is that instead of laying the cash out upfront you can use that cash to generate income while you also have your valuable product you wanted to buy. Not sure why that’s hard to parse.
Many of the other 0% interest over 24 months hit you with all the accumulated interest at 30% if you don't pay off in full in that 24 months.
But that’s not what Apple is doing here.
> Compared to other BNPL schemes, this writer hasn’t found anything about late payment fees, debt collection, or charges that kick in upon non-payment of a scheduled amount.
I did 45 seconds of research and found Apple's official confirmation:
> Apple Pay Later doesn't charge any fees or interest, even if your loan account goes past due.
Affirm for example routinely sells past due debt to collection agencies. Has Apple said they won't do the same?
And even if you do manage to pay everything on time, on average you're better off with a credit card (pay after 30-60 days, i.e. 45 days average, and get at least 1.5% cashback vs. pay in four installments over 6 weeks, i.e. 3 weeks average, and get no cashback).
Merchant fees for BNPL are also higher than they are for credit cards, as far as I know.
> As another example, it allows you to purchase a new laptop while selling your old one, such that you don’t hVe time without one at all.
You can do the same with a credit card – you'll have at the very least 30 days to do so without paying a cent of interest. For most BNPLs, the first installment is due immediately at the time of purchase.
But that isn’t what Apple is doing, and the details matter.
Apple Pay Later lets you split a purchase into four equal payments over six weeks with no interest or fees; not years without a thought of paying it back. There isn’t even a hard credit inquiry, so it doesn’t hurt your credit.
The only fees of any kind associated with Apple Pay Later are insufficient funds fees or overdraft fees from your bank if you don’t have sufficient funds.
There was a heat wave and I bought an air conditioner yesterday using Affirm to smooth out the payments.
In fact I cut up all my credit cards about a week ago and plan to only use BNPL vs credit cards going forward if I’m in need of a loan.
Also I am always surprised when people don't treat CC expenses as they would cash...
CC interest has always been intolerably high to me. I totally get emergencies and now I am out money. I don't get rolling balances when that costs you like 2% per month.
It’s easier to fight back when the loan terms are explicitly laid out, “okay you’re getting a one year loan and it’ll be $1000 loan and $300 you’re going to pay in interest”. And I’m like “okay I’ll wait and just save up”.
The lesson I learned growing up with a single mom was “spend the money immediately or else stepdad will spend it on drugs, money is a liability, you’re better off having things, harder to pawn vs cash”.
And credit cards just makes that highly dysfunctional mindset that’s burned into my brain even worse.
It is the 25% APR that I think is a problem financially.
At least with Affirm or BNPL I know the exact terms and know it’ll be paid off in exactly a year. It’s much easier to reason about for my impulsive brain vs “loan that lasts forever from the credit card company and you pay absurd amounts of interest because you’re dumb”.
My mom declared bankruptcy twice so I’m still doing better than her but it’s hard to get an innate sense of “we don’t have the money for that” growing up in a household where if there was money in the bank it was spent ASAP.
On the bright side there’s more money in my 401(k) than I owe in debt, which is nice. I know the optimal strategy would be “contribute to the match then use the rest to pay off debts then increase” but I just don’t trust myself.
It’s like I’m in an eternal struggle with a rational me and an impulsive shopping spree dopamine seeking me, that just wants immediate gratification. Luckily it seems like with age the rational one is getting stronger.
It makes more sense too, after all what really proves that you're good with money is when you've never needed borrow in the first place.
"Churning" cards like in the US is the best way to tank any chance of getting a mortgage here. They really prefer to see customers with a clean slate.
Buying a phone on a pay later scheme, even a normal mobile contact that's for a minimum duration will hurt it (and will reduce your available mortgage by more than the actual loan amount)
Or if you really want to build better financial habits why even take loans every two weeks?
And the answer is because I am only 98% a rational human being. The other 2% is a weird vain conceited animal that doesn’t believe the future exists who wants shiny things and he wants them yesterday. I’m lucky my income has increased faster than my desire for more stuff, at least.
But to be fair, that number has improved quite a bit! In my 20s I was literally insane. Like, I took out student loans and lost all the money playing high stakes blackjack (Yes I realize that is absolutely insane).
At some point I realized the future is an actual place that really exists and have been trying to be more courteous to future me. Mostly after having children and not wanting them to live a horrible life because of me.
a CPI calculator says we've had about 25% inflation in the past 4 years, and my own basket of goods suggests it's closer to 50%. (For example gas in Texas has trough to peaked 300%, more like 200% on average). So I think the strategy might be a good one, albeit hard to get a ton of money behind (ie, I have yet to find a way to play it with $25k)
One day I saw him sighing over the credit line forms for some of the customers of that day and he explained that these things are almost always used by people who can't afford it. He'd had some people in trouble trying to bring the stuff back which of course he couldn't do. And the head office didn't care.
Better to stay away from this crap.
I guess it makes some sense because today's 1 buck is only worth 90 cents next year but nope I just buy my stuff outright, even cars.
The only thing I'd get a loan for is a house. I don't even have a credit card, the only reason I ever had one was that debit cards weren't accepted everywhere but that's long fixed.
To me, it indicates the decreasing purchasing power of the average consumer, combined with the desire to still buy all the new things. Using the screenshot from the article as an example - if you have no other option but to finance a $125 pair of shoes over the course of two months, buying them is probably not the best financial decision at the moment.
However, it seems to work quite well in the US, where people grow up with several credit cards in their wallet. I always wondered how far you can push that. Looks like we're about to find out.
But I agree that neither credit cards nor BNPL were created with benevolent intentions - a lack of financial literacy seems to be fairly common, and these payment methods are used as ways to make people feel richer than they actually are, and spend accordingly.
That said, a lot of these operators seem to be offering 0% interest: let's see how long that - and they - survive.
FedNow is operational. It just turned on last month. It's run by the Fed, like ACH and FedWire. It's much faster - seconds. The Fed charges $0.043 per transaction, and the transaction size is up to $100,000. Settlement is immediate; funds are available upon receipt. It's a US bank to bank system, mostly, like ACH and FedWire.[1] Many other countries have similar systems.
As banks roll this out to consumers, there will effectively be a ceiling on how much other money transfer services can charge. As with ACH and FedWire, this is a fixed fee service, not a percentage of the amount. This makes running a "payment rail" service far less profitable.
Here in the US I recently learn you can even over turn your DEBIT account, how does that even work?!?!
2% for that service is worth it 100% and anyone who disagrees doesn't understand the math. 3% is probably too.
The problem is Visa et Al don't provide that. They provide it to consumers my demanding it from companies.
Hell even when the companies don't fit the bill sometimes the banks do instead.
But never does Visa pay.
Out of, let's call it 3% of blended-rate merchant fees for simplicity, about 2% goes directly to the issuing bank, who (at least in the US) passes on 1-2% to the cardholder in the form of "rewards". The fact that issuers can do this shows that card payments are priced extremely inefficiently.
That alone is quite ridiculous and has no bearing on the overall efficiency of Visa and Mastercard as global payment systems.
In the EU, interchange was recently capped at 0.3% for credit cards (i.e. at 1/10th of the US value), and most stakeholders have come out alive – the only thing that went away were these ridiculous rewards schemes, which effectively constitute a tax on people with poor credit and/or financial literacy.
The marginal cost of providing secure online payments probably lies somewhere well in the sub-1% region for domestic payments and a bit more when foreign exchange is involved.
My post was "if they offered risk mitigation 2-3% would be fine but they don't"
Even risk mitigation isn't that expensive, though. 0.4% seems to be a common fee for insurance against chargebacks.
Don't pay a BNPL scheme, maybe they start shaming you to your iMessage contacts or progressively disabling the apps that you can use on your phone.
thats illegal
>Social media and other electronic communications. A debt collector may not use social media to publicly post about a debt that they claim you owe.
https://www.consumerfinance.gov/ask-cfpb/what-laws-limit-wha...
Cut down on fraud, yes. Evaluate credit-worthiness from my phone metadata? No thanks - I’d advocate banning that wholesale.
The iPhone XR (2018) and second generation SE (2020) are also pretty cheap on the secondary market, and will run iOS 17.
Has anyone on this website ever actually been poor before, or are you all pretending based on the movies you watched? This entire thread is bumming me out big-time.
https://www.metrobyt-mobile.com/cell-phones/brand/apple
The SE3 is definitely no slouch when it comes to performance and will probablg get updates for years.
Apple released a security update for the 2013 iPhones 5s earlier this year.
People are unbanked for all sorts of reasons, it doesn’t mean they can’t afford $35 a month for a phone - 2 hours worth of work even at McDonald’s these days.
The phones are subsidized and are $0 with service
Considering that Apple's phones receive software updates for at least five years, it's conceivable that many are being used by a second or even third owner.
Most of that "take rate" goes to the issuing bank, which returns it to the customer in the form of rewards, which can often be redeemed for cash, and a number of issuers now offer generic 2% cashback cards. There's also the added benefit of fraud protection (and the ability to charge-back, as a last resort). Anyone using Cash App or similar in lieu of a credit card, I just assume is financially illiterate.
Apparently Discover has a market cap of “only” $22 billion. $30 billion or so would definitely do the job; and that’s only, what, less than a quarter of Apple’s cash reserves?
Seems almost… cheap for buying an entire freaking payment network.
I hate my work for saddling me with an Amex company card (in my name) and requiring I pay all my business expenses with it. In Eastern Europe and even Paris (taxis!) they will laugh in your face or at the very least the machine is suddenly "broken". At least give me a card that actually works.
Quite
Visa 500b
Mastercard 380b
Amex 115b
On the contrary, if Apple wants instant and almost ubiquitous merchant acceptance, it would make much more sense to buy a low-volume but wide-reach network than one that's generating lots of revenue from fees, simply because it would be much more capital intensive to finance.
And as explained above, market price is an extremely poor proxy for network reach. Economic success as a payment network takes more than just reach; it’s necessary, but not sufficient.
But acceptance is definitely poor outside the US compared to Visa and Mastercard.
Abroad, they have "roaming" agreements with many other large networks such as JCB, China UnionPay, and Diners Club.
The value of an incumbent payment network isn't the technology or the revenue it generates; it's the network itself (in this case, in the form of merchant acceptance).
You’re saying this as if it’s a “when”, not an “if”.
> no chargebacks to worry about
Chargebacks aren’t something to worry about for customers – they are the reason they feel comfortable giving new merchants a try!
Yes, the fact that Blackrock has now applied for a spot Bitcoin ETF makes it much more "when" than "if".
> Chargebacks aren’t something to worry about for customers – they are the reason they feel comfortable giving new merchants a try!
Correct, but merchants care a lot about how much they fork over to Visa/Mastercard for every purchase. Most people won't care about not paying through a credit card for small retail purchases. (e.g. People know if Starbucks got their order right and can have it fixed right there on the spot)
People dealt in cash long before credit cards ever existed. The scenarios where you really care about the chargeback protection do not make up a majority of purchases and can be addressed through other mechanisms. IMHO, credit cards will still exist in the future, just in a greatly reduced capacity.