Apple Pay Later’s Time is ‘Soon’ – But Will it Be Soon Enough?

Apple’s push into financial services has been well-documented here at PYMNTS.

Key among the tech giant’s efforts to cement an ecosystem that brings higher-margin services to the forefront has been the move to offer credit cards, digital wallets and its impending BNPL option, Apple Pay Later.

 And in the case of installments, BNPL-as-offered-by Apple is on the near-term horizon. As discussed last week in an interview with CNBC, CEO Tim Cook said that Apple Pay Later would be launching “soon” and, as has been reported, is being tested by company staff. The BNPL feature, as had been previewed upon announcement last year, would be presented as a payment option within the Wallet app, with payments spread out over several weeks and with no interest charges.

With the timing thus far unofficial, and the BNPL launch having already been pushed out due to technical challenges, as Bloomberg reported in the Fall of 2022, the question remains: Just how big a splash will Apple Pay Later make?

Progress with Payments 

There are indications that the company is progressing in its payments initiatives, though off a somewhat small base. 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. As we reported here late last year, more than three-quarters of major U.S. retailers accept Apple Pay and nearly half of all U.S. consumers have iPhones in their pockets. But Apple Pay accounts for just 2.4% of overall in-store purchases.

However, most recently, during last week’s earnings call, Cook remarked that the company achieved “double-digit revenue growth from App Store subscriptions and set all-time revenue records across a number of categories, including cloud and payment services.” All told, he said, Apple now has more than 935 million paid subscriptions. And Chief Financial Officer Luca Maestri said during the call that “Apple Pay is now available to millions of merchants in nearly 70 countries and regions. And we saw a record-breaking number of purchases made using Apple Pay globally during the holiday shopping season.”

 The volume/value of those purchases were not detailed on the call. 

But Maestri said later in the call that “the level of engagement of our customers already in our ecosystem continues to grow…both transacting accounts and paid accounts grew double digits. And so that bodes very well for the future.” He also added that the company offers multiple payment methods in multiple countries.

Those methods, of course, will include Pay and BNPL. But those offerings jockey for position in an increasingly crowded arena, even when BNPL is gaining traction in financial services overall as a tool to manage inflation. 

America’s biggest banks are readying their own digital wallet against providers like Apple and PayPal, tied to payment networks’ debit and credit cards.  

The card efforts have had their share of headwinds. Goldman Sachs’ results showed that its fourth-quarter provision for credit losses was $972 million, reflecting provisions related to the credit card and point-of-sale loan portfolios — and said that its Consumer net charge-off rate stood at 2.8%, up 0.5% year on year. The Platform Solutions segment, which houses the Apple Card product, saw revenues of $513 million in the latest quarter but lost $778 million in the same period, per corporate filings. 

For Apple, payments are a key part of building an ecosystem that ties hardware and services together and progress is showing through, but not without speed bumps and challenges in the mix.