Apple Could Deny BNPL Access Based on Consumer History With Company

Apple Pay Later will also look at whether customers have applied for an Apple Card credit card and the other cards they have linked to their Apple Pay accounts.

Taking part in Apple's Pay Later service might depend on your history with Apple.

The company will apparently evaluate potential customers based on their past spending with Apple, and even the Apple devices they own, Bloomberg News reported Tuesday (Feb. 14).

In addition, eligibility for Apple's planned buy now, pay later (BNPL) service could also depend on whether customers had applied for an Apple credit card and the other cards tied to their Apple Pay accounts, the report said.

According to Bloomberg, the eligibility criteria were revealed during a test of Apple Pay Later with company employees. PYMNTS has contacted Apple for comment but has not yet received a reply.

Apple said recently its BNPL offering could launch “soon” – Bloomberg said it could debut in the next several weeks after testing it with retail employees – and marks the company's ongoing push into financial services.

As noted here last week, the size of the impact Apple Pay Later will make is still undetermined.

“There are indications that the company is progressing in its payments initiatives, though off a somewhat small base,” PYMNTS wrote. “Clearly, the dry kindling is there, so to speak, as determined by merchant acceptance and the consumers having the actual tools in hand with which to pay.”

Past research by PYMNTS found that more than three-fourths of major retailers in the U.S. accept Apple Pay, while close to 50% of American consumers are iPhone users. However, Apple Pay accounts for just 2.4% of overall in-store purchases.

(As more recent research by PYMNTS shows, digital wallets are much more popular with people making on-line purchases than with consumers paying for things in-store. PayPal represents just 2.7% of in-store transactions compared to 13.5% online. Apple Pay accounted for 4.3% of the total amount spent on online purchases, while Google Pay's share was 2.4%.)

Things could be shifting, as Apple officials said during the company's most recent earnings call that they had seen record revenue growth in payment services, as well as a record number of purchases made with Apple Pay during the holiday shopping season.

Meanwhile, Apple Pay and Google Pay could soon face a challenge from big banks, as illustrated by last month's announcement that Zelle owner Early Warning Services will operate a digital wallet with participation from seven of the country's biggest banks.

“Through that initiative, I think merchants, consumers, and banks will all see a gain there, and create a better checkout experience for our customers,” Bank of America Head of Product, Merchant Services, Wally Mlynarski told PYMNTS earlier this week.

He argued that “the most logical provider for a digital wallet, at least a consumer would say, is their bank.”

“Who holds the risk associated with that and who do I, as a consumer, hold accountable for my experience as I’m working through that,” Mlynarski said. “That’s why it comes back to financial institutions and banks. We have to maintain that.”

The Apple Pay Later documentation shows that transaction histories are stored with its financing subsidiary, Goldman Sachs and MasterCard — but not with Apple itself, for privacy reasons.

The company is gearing up to launch Apple Pay Later in the coming weeks after releasing the test to thousands of retail employees earlier this month. Before the expansion to retail staff, Apple had been trying out the program with corporate employees for several weeks.

February 15, 2023