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Apple Inc (Nasdaq: AAPL ) plans to launch a service that will enable users to repay Apple Pay purchases over several installments, according to Bloomberg News.
Citing sources familiar with the matter, Bloomberg reported Tuesday that the tech giant will partner with Goldman Sachs Group (NYSE: GS ) as the lender for loans issued through the new “Apple Pay Later” feature.
The service, which is still under development, would be available on Apple devices via the Wallet app and for use in either stores or shopping online.
Users will have the option of paying in full or in installments. The cost of an item may be split across four interest-free payments every two weeks or across several months with interest. Customers will need to apply for approval before making purchases, according to the report.
Apple Pay Later would mark Apple’s latest foray into financial products. In 2019, Apple debuted Apple Card, a credit card backed by Goldman Sachs and accessed through the iPhone.
Bloomberg did not say when Apple Pay Later could go live. Both Apple and Goldman Sachs did not comment on the report.
Apple’s latest service would rival existing “buy now, pay later” (BNPL) services from Affirm Holdings, PayPal Holdings and Klarna Bank.
Over the past year, the BNPL industry has boomed due to the pandemic-related surge in e-commerce and is expected to continue growing.
Payments made through a BNPL option are predicted to swell to $995 billion by 2026, up from an estimated $226 billion in 2021, according to findings from Juniper Research.
C+R Research says that over 60% of US consumers have used BNPL financing for an online purchase in the past 12 months. The study found that two in three online shoppers believe the BNPL option is “financially risky,” while 59% said it led them to purchase an “unnecessary” item they otherwise could not afford.
Still, 56% said they prefer it over credit cards because the payments are easier to make, there’s more flexibility, the approval process is easier and interest rates are low.
The industry could face regulatory hurdles in the future, however, as concerns have been raised about overspending by consumers and a lack of transparency regarding the exact terms of lending.
It remains unclear how BNPL fits into regulations because the platforms offering the service do not have bank charters, and the laws vary by state, but some financial experts expect the industry to come under more scrutiny during the Biden administration.
Source: Equities News