How Apple Pay later brings money to the company

by admin, Thursday, 9 June 2022 (2 months ago)

Apple’s Pay Later is a new installment payment program offered to its users by the Cupertino-based company. It is promoted as a 0% interest and fee financing program. I agree that this sounds pretty appealing. But no one will lend money if there is no interest. Today, 9 in 5 mac published an interesting article, in which an associate professor of business school Rajat Roy explains how Apple will make money from this service.

What is Apple’s 0% interest rate financing program?

Apple entered the field in 2019. However, a 0% financing plan was only available when purchasing an iPhone. In addition, only Apple Card users could use it. Of course, later, we were able to use it when buying other Apple products. But it was limited to cardholders. In that sense, it is a new product. You can use it when you buy literally any product or service through Apple Pay.

Apple Pay Later provides users in the United States with a seamless and secure way to split the cost of an Apple Pay purchase into four equal payments over six weeks, with zero interest and no charges.

Built into Apple Wallet and designed with users’ financial health in mind, Apple Pay Later makes it easy to view, track and repay Apple Pay Later payments within the Wallet. Users can apply for Apple Pay later when they check out with Apple Pay or Wallet.

Apple Pay Later is available wherever Apple Pay is accepted online or in-app, using the Mastercard network

However, there are some nuances you need to know when using the service. Unlike the two-year Apple Card, this service allows customers to split the payment into four equal parts and pay within six weeks.

How will Apple make money from the 0% interest rate financing program?

Well, as we said, Apple will be able to make money even through a service with 0% interest rate and zero charges.

Apple seeks to consolidate its position in the world of consumer finance and increase its profitability […]

As more and more Apple customers start using Pay Later, they will benefit from merchant fees. These are charges that retailers pay to Apple in exchange for being able to offer Apple Pay to customers.

Apple Pay Later

In addition, Cupertino will also collect valuable data on consumer buying behaviors. This way they will be able to predict future consumption and spending behavior.

This service is nothing new. But there are two risks. According to the professor, the first thing is that it will have a potential impact on your credit rating. Second, such services always encourage you to spend more than you earn.

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