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Apple to launch 'buy now, pay later' feature on iPhones: Here's how it works

June 08, 2022
5 min read
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This week, Apple announced updates coming to your iPhone when iOS 16 launches later this year. In addition to other travel-friendly changes, one we want to highlight in particular is Apple's entrance into the very active "buy now, pay later" market with a feature called Apple Pay Later.

Let's take a look at what this feature is, how it works and when you can expect it to be available.

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What is Apple Pay Later?

(Screenshot from Apple)

Apple Pay Later is Apple's version of "buy now, pay later." This allows you to make separate, equal payments for purchases, instead of paying all at once.

Rather than making a large purchase on your credit card and paying it off over time — which can mean paying interest — "buy now, pay later" features allow the ability to make multiple payments over time without paying interest.

Typically, these services offer a set number of payments/months available without fees or interest, though those additional charges can creep in if you go beyond the included terms or miss payments.

Related: 10 travel-friendly features coming to Apple’s newest iPhone software

How does it work?

So how does Apple Pay Later work? It will allow you to make four payments for a purchase, split into equal amounts.

(Screenshot from Apple)

Each payment happens every two weeks and is scheduled automatically in your Apple Pay wallet. Thus, you don't have to worry about forgetting to make your payments.

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There are no fees or interest with Apple Pay Later.

The first payment with Apple Pay Later is due at the time of purchase, and then the remaining three payments will be paid every two weeks — a total of six weeks from the purchase date. You can make the remaining payments early if you wish.

Apple Pay — as well as Apple Pay Later — isn't limited to paying with your Apple Cash or Apple Card. While you can add most credit cards to your iPhone wallet, you'll need to link a debit card as your repayment method when setting up a loan with Apple Pay Later.

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There will be various tools in the Wallet app to help you manage your scheduled payments and outstanding balances. You'll even be able to check your eligibility for Apple Pay Later transactions before purchasing an item or service.

Auto-pay will be enabled as the default setting, but you'll be able to turn off this feature if you can't make your payment on time. When signing up for a new Apple Pay Later transaction, you'll be able to see all your upcoming payments (from other loans) that are due within 30 days.

Note that the eligibility check requires a soft credit pull, but it won't affect your credit score (or count towards Chase's 5/24 rule), like signing up for a new credit card would.

Understanding how Apple Pay Later works is just one side of the equation. You should also understand how using "buy now, pay later" options can lead to missing out on valuable credit card rewards. Make sure you don't leave valuable points and miles on the table when choosing your payment method.

When will Apple Pay Later launch?

Apple Pay Later will be available with the launch of iOS version 16. That is expected to be available when the iPhone 14 launches this fall, rumored to be in September. If you can't wait for the new features, the first public beta version of iOS 16 is expected to be available in July.

Merchants who already accept Apple Pay won't need to do anything differently to accept Apple Pay Later. Apple is leveraging the MasterCard installments program as the payment technology to process each Apple Pay Later purchase.

The credit assessment, decision and lending will be managed through a wholly-owned subsidiary of Apple called Apple Financing LLC, which maintains the appropriate state lending licenses.

Apple has said this new feature will be available "anywhere that Apple Pay is accepted, in apps or online." It will not available for in-store purchases.

Bottom line

The ability to buy now and pay later is becoming increasingly popular.

Its main selling point is making equal payments over time without interest. However, you should always make sure to use these features responsibly and not accrue debt simply because you can pay it off over time or because the payments lack the weighty interest assessed on a credit card. Also, know that not all of these services function the same and you may end up trading away some credit card points or protections in some cases.

The Apple Pay Later specifically might indeed be a handy feature to make payments over time and should launch later this year. Just make sure you are approaching it responsibly since our No. 1 rule in points and miles is to always pay your bills in full and on time.

Featured image by (Photo courtesy of Apple)
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
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Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
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  • Intro Offer
    Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

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  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
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Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,300+ lounges, including Capital One Lounges and the Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023