This seems like a logical and interesting service that should drive quite a few sales for Apple as people impulse-buy status symbols they shouldn't really try to afford.
My big concern with using some of these "pay later" types of services is that it seems incredibly risky to your credit score even if you do everything right and pay it off on time.
If Apple or anybody else can clarify on this point, that would be great. Otherwise, I'd never touch this.
You used the word "typically" in the last post, which isn't a very precise or confidence inducing word when dealing with something important to your life.
When I bought my Centris 650 in college, I bought it using a loan that was initially set up by Apple.
I don't see anything surprising or new about this other than that Apple has an easier way of managing that loan than a book of paper that you ripped one out each month and sent it in along with a paper check.
iPhones have been financed and or given 0% loans by nearly every carrier and they have $51 billion dollars cash on hand. Providing their own loans makes sense regardless.
I mean I had an Apple Loan for students way back in 2000 with an APR % that would have made me pay $8,000 for a 400mhz G4 had I followed their payment schedule...
I saw one of these while checking out on Uber Eats recently.
#1, no, I don't want to spread my $50 worth of sushi out over 4 months
#2, if you do need to do that, maybe you shouldn't be ordering from Uber eats?
It seems extremely parasitical. I'm equally bothered that these companies are doing this and that some consumers feel the need to do this (and think this is a good idea)...
BNPL schemes are (or at least were as of a year ago) destroying Gen Z. This one may be less destructive as it doesn't look like interest rates are a thing, but still. Don't get into the habit of spend ing money you don't have.
Speculation, but the lack of interest rates is probably more destructive. The profit here comes from more usage on Apples cc system rather than some other bank taking the rake. Apple is incentivized to make “spending money you don’t have” as easy as possible - it directly benefits from it - and thus makes it even more appealing with no interest rates.
QuadPay, Affirm, Apple now, there are SO many schemes going on to entice people who can't actually afford things to buy them with credit and destroy themselves financially. It's very common and your request for data strikes me the same as if you had asked if there's data on whether the Sun shines. It's just so obvious it's mind-boggling to question it.
This is honestly disgusting predatory behaviour which seems to be rampant in Fintech right now. The majority of people they are targeting for this service shouldn't be put in the position to have this available to them.
lol wut. son, spend 10 minutes reading about payday loans, many of the big economic crashes, shady practices by banks, and crypto. fintech isn't a thing, it's just a way to enable already existing behaviors that finance does all the time; it's always been predatory.
But buying a MacBook Air can be a best investment if a person want to be a developer or designer. I agree that it's generally bad, especially for wasting for something like fashion or too expensive iPhone Pro.
I'm not sure about that, grain of salt because I did no research to back this up but aren't apple users in general wealthier and therefore less likely to be the market for this sort of thing?
Yeah, the commenters here are missing a HUGE disruption in the BNPL market. Klarna was already ailing — I wonder if they can survive this punch. Interesting to see how BNPL industry will respond.
What's the value proposition of a zero interest/no fee buy now pay later scheme? Is it just reaming folks who miss a payment? A loss leader getting more users into the Wallet ecosystem?
It seems like many of them act like credit cards and charge the merchant a percentage, since they “drive consumption” and encourage people to buy stuff. Of course, this fee will likely be added into the price that all consumers pay, so as these get bigger, we all will be subsidizing interest free loans to people in the form of 1%-3% higher prices. Much like credit cards are today.
> This is clearly targeted to people with good credit.
The commercials for Apple Pay have me thinking the exact opposite.
* People with good credit don't need to manage their monthly credit payment. They simply pay it all off.
* People with good credit also don't really need to apply for an emergency credit card (unless they happen to forget their wallet).
My impression is many of these products are akin to loan sharks. They loose/break even on "good" borrowers, but make loads on people who are "so close" to being able to fully repay.
It makes products more “affordable” (emphasis on the quotes) by spreading the payment for them over multiple salary cycles. That TV you didn’t buy because you couldn’t afford it? You told yourself you don’t need it, but now that you can mechanically pay for it, you “need” it so you’ll buy it.
It also allows the sellers to increase their prices or even simply upsell without pricing out their own consumer base.
Capitalist cannibalisation a level-up from Amazon's pets and cattle categorisation on the fair-game userbase? Accounting minded players game the system to their benefit maximising purchasing power on credit over a timespan.
My SO recently bought an electric bike using this sort of scheme, not from Apple obviously, but the monthly payments toward the 3500$ bike were less than what it cost to commute to work using public transport before that. So it turned from an being a non trivial investment to an obvious thing to do.
The value proposition to me seems to be that they sold a bike at 3500$ they would not have sold otherwise and they can deal with the payment being made over time rather than all at purchase time.
For the user the value proposition is that value adding purchases like this can be made and paid off while they provide value.
That situation is close to the textbook example for when a debt hawk like Dave Ramsey would tell you it was okay to use a credit card. When you are actually using it to facilitate an investment in your future, not just buying toys. The additional zero-interest aspect is icing on the cake.
> When you are actually using it to facilitate an investment in your future
I might have expressed this poorly, but it wasn’t an “investment in the future”. And that’s exactly what made it interesting. The monthly costs where lower immediately, since the cost of transport which was saved was higher than the monthly cost to pay for the bike.
It was just a straight up cost reduction due to the structure of the payment. Had the zero interest monthly payments not been available then it would have been the more typical “investment/ROI over time” situation, and there might be an argument for it still being beneficiary to go into debt to make the purchase because over the long run it would pay of again. But the payment structure just makes everything a thousand times simpler.
This is Warren Buffet's forte, allocating massive amounts of capital. Since Apple is his first/only tech company, I wonder if he's playing a part in this.
A dollar today is worth more than a dollar tomorrow. Pair that with American Optimism and trusting the Fed, debt just makes sense. It's basically temporal arbitrage.
I still don't understand this obsession everyone else has with finding reasons to criticize Americans. Especially when it's frequently based on ignorance.
The other reply to your comment is pretty instructive. There appears to be a positive correlation between how wealthy a country is and how high the household debt load is.
The merchant pays at least double the rate compared to a normal credit card transaction fees. Merchant pays more for the payment processing and gets better conversion.
But Apple BNPL applies to all merchants that accept Apple Pay. I cannot imagine that Target/Albertsons/Trader Joes/Costco/etc agreed to pay an extra 3% in payment processing fees if their customer chooses to use Apple BNPL.
I am referring to this line in the bitsaboutmoney.com article:
>BNPLs pitch themselves to businesses as more marketing efforts and less simple payments rails. They’re more expensive than cards by about 300 bps.
I assume this is all the same as Goldman Sachs’ Apple credit card. The same payment fees from merchant to Goldman Sachs, and then Apple might get a little too. Since Goldman is taking all the underwriting risk, I would be surprised if Apple is getting the lions’ share.
Apple’s reward is their devices becoming more popular among people who cannot get credit cards and might find utility in Apple BNPL.
> I understand this is instead of the 2% cash back that Apple Card pays on full payments.
That would reduce the appeal a little. And that's different than their own-store policy on their card -- if you buy from Apple with an Apple Card on the installment plan, you get the 0% for 12 months or whatever, and you get the 3% cash back too.
Thanks for the 2% comment, by the way. Made me go look, since I only recall it being 1% (for most things). Turns out it's 2% whenever I use my Apple Watch to do the transaction. Works for me!
I do not think Apple negotiated with every merchant that accepts Apple Pay for a higher fee for Apple BNPL payment. The fact that any Apple Pay transaction qualifies makes me think the regular payment processing fee for a credit card is what Goldman Sachs/Apple get.
It's both a form of credit and marketing. Some people don't like credit cards for whatever reason.
It's not a lot of credit since you have to pay it back pretty quick, but it does have a similar benefit to paying with a credit card and then paying the monthly statement.
If it works like here in Australia, the merchant pays a very high fee, but in return, there are no chargebacks and the BNPL financer pays straight away.
So in return for a high rate (merchant fee for AfterPay here in Australia is 4+%) the merchant gets guaranteed payment and no chargeback risk. The BNPL service makes money on the merchant fees and on the fact that this lending appeals to young people and those with low credit scores.
It's an extension of what used to be called "lay-by" here, but in that case, the merchant wouldn't release the item until it was paid in full.
Feels like Apple is more and more seduced/mesmerized by the opportunity to provide random consumer services that promise large revenues. Why add yet another new product to your portfolio when you're still struggling so much with software quality?
My guess - people think it is fooling unsophisticated customers into making poor financial choices and buying things they should know they can't afford.
But I'm with you, I don't see it as a big deal. I routinely take advantage of the 'no interest installment plan' for my Apple toy purchases on my Apple card. Why wouldn't I want to hold off on giving them my money for as long as possible, especially in an inflationary environment?
Responsible people have already a lot of easy choices for short term free money. Banks almost literally throw credit cards at people, with 45-60 days without any charge (and even with cashback) - assuming that you can afford it.
That is often the case, but not always: It can make perfect sense for a merchant to effectively pay the interest on your purchase, if it means the difference between making a sale now (and getting a bit less than list price) vs. sitting on inventory.
If it's not the merchant paying for the loan, the story is very different though.
It’s free to end consumer, but these schemes make money by charging a percentage to merchants. And those merchants will compensate by bumping up their prices a little to cover the transaction costs.
In the best case, these are pointless services that only transfer money to the finance industry. In the worst case, they incentivize people to spend money on things they can’t afford (and also transfer money to the finance industry).
Good question! I don't see anything about it, other than that it'll damage your credit history.
To me this seems like a recipe for trouble, I'll stay away from it.
There's also a part of my brain that jumps to: "if you missed a payment, would they just lock you out of your laptop by some remote command?", though there is no indication of this, and it seems unlikely (as of now).
Same thing that happens when you refuse to pay your credit card bill, I assume. Annoying bill collectors, maybe a court judgement, and for sure a dramatic cut in your credit score.
My laptop died recently, and I went with an M2 MBP. I went in expecting to pay it in full, but with no interest/fees, why wouldn't I choose this? It beats inflation, even if only minimally.
Seems predatory towards people who are buying stuff they can't afford, otherwise I don't see how they make money (minus the overpriced laptop I just bought, I guess).
If you're in the US and have good credit, you can do better by opening a credit card with a 0% APR period for 12+ months in addition to a sign-up bonus (e.g., Chase Freedom Unlimited, Amex Blue Business Plus), although that takes a little more effort.
You don't need to pay it off every month during the intro APR period: pay the minimum for the first N statements, then pay the full balance, and you'll pay $0 in interest or fees.
Just don't forget, because if you're late paying off the balance they will usually charge interest retroactive to the opening date of the account (not sure that is the case in this specific example).
It's always good to understand what the policy is on an offer like this, but most credit card intro rates are not like this - it is typically store charge accounts that offer "12 months same as cash" that accrue interest and add it if not repaid during the time offered.
If one is worried about forgetting, this probably isn't a good hack, but it should be possible to (a) buy a T-bill or CD maturing near the balance due date and (b) use Bill Pay to schedule a payment for the balance due.
PayPal Credit (a specific credit line) does that. Discover, Wells Fargo, Chase, Capital one, all wanted to start interest from the date intro apr ended.
Even if you pay everything each month the company makes 2-3% on you minus whatever cash back, which is 12-30+% a year on your monthly spend. You just don’t see it directly.
My score is always in 660-760 range over yearly view, and many of my cards are around 24 to 29 % apr. But as you said, I pay all of them every month, so zero interest paid since 2019. Only a credit unions rewards visa is 12%.
The use case is people who do not qualify for a traditional 2% cash back or equivalent credit card. Surely Apple does want people who can pay their Apple BNPL debt per the schedule.
the target is uneducated (in the financial sense) consumers who are enticed into making purchases they might otherwise not make (and probably shouldn't make)
Apple probably wants to get at the consumers who are still buying cheap Android phones who will be bowled over by the psychology of splitting the purchase price into installments
It only applies up to $1,000, and if you used an Apple Card you'd get 3% back on your purchase. If your purchase happened at the beginning of your credit card month, you'd also get 4 weeks of free float, versus the 6 weeks you get here. Doesn't seem like an amazing deal, if a reward credit card is an option, and assuming they'd give you the same thousand dollars of credit.
Isn't max credit card float closer to 7 weeks? If you buy something the day after statement close, it takes 4 weeksish to issue another statement, and is due in another 3 weeks. Obviously if you bought at the wrong time in the cycle, the day before statement close, your float can be as little as 3 weeks.
I think the OP is referring to the financing options available for larger hardware purchases, which is separate from this program.
I bought my M1 MBP using the financing they offer and it was 24 months, no interest, _and_ you do get the 3% back immediately upon purchase. They also set up the payment plan for you so you do not have to worry about missing a payment and getting charged interest you were intentionally avoiding.
It's a great option if you are on top of your finances, but the point remains that it can easily be used to live outside of your means.
Just to add, a store person in Modesto Apple told me in order to get 0% apr for 24 months on new phone, that phone has to be tied/locked with a carrier for the duration of loan. I knew that was a load of crap, as 24 months is between me & bank/apple card/goldman. Its not like phone will be held as security. So I paid in full by apple card, and called apple card customer service right outside of store right away, and they made it a 0% apr 24 month plan, with no change to unlocked phone.
When you do BNPL you forgo the credit card rewards you would otherwise get, which can easily be valued at 3-5% of the purchase (I.e. more than the benefit of taking the free credit)
Remember, it beats inflation in a theoretical sense, but only if you actually will do something with the extra cash today. If your salary won’t change during the loan, and you’re not investing the money you didn’t spend, then you’re not realizing any gains against inflation. In fact, you’re just giving yourself less money tomorrow, when inflation should make other goods more expensive.
Hypothetically, you could pop that money into a checking account with extremely marginal interest and still make money. Better in your pocket than Apple's, I guess.
The $25 you might make from saving $1000 is, to me, not worth the cost of having a reoccurring debt to service. Especially in the face of layoffs etc. I suppose someone might say a monthly payment is preferable to less savings in that situation… so I guess the financing could work in your favor depending on your situation.
A 0% is always better than paying upfront. There is the money you make from your saving account, the safety of having more available savings...
The only downside of taking a 0% loan is if you're bad at finance and getting that loan makes you spend more. Either by buying something more expensive that you would without the loan, or buying more stuff with the money you didn't have to give upfront.
My only catch is this loan requires a soft credit report - I have a freeze on most of my credit scores (used to be there were only 3 now there are a few more). Even a soft pull will hit that barrier.
It's very easy for this to push people into buying more than they need.
90% of people are fine with an M1 Air, the last time I went to an Apple store the sales clerk straight up refused to sell me one. He basically told me I didn't know what I was talking about and kept trying to sell me a pro.
I asked him 3 times to sell me an Air, and ended up leaving in frustration. Not before he pitched buying a pro on an Apple line of credit instead.
If I come into a store and tell you what I want to buy, we're not having a conversation. You have no idea what or who I'm buying it for.
Best Buy doesn't do this, I was able to get my Air without an argument and walk out.
If anything, this pay later stuff will make the issue worse. You'll go into the Apple store to be told you might as well get the most expensive thing they have in stock, it's zero down anyway!
If you want to talk about what 90% of people are "fine" with, honestly it's a Chromebook.
I have a Chromebook I bought in 2018 for something like $200, and it's "fine" for gmail, online banking, youtube, and other casual stuff. I have an ssh app on it to use for work, and that's "fine" as well. Most people don't need more than this.
Do the apple sales people get commission? I seldom enjoy working with people looking to influence me to do something so that they can grow their comission.
If I've gotten any kind of general attitude at all from Apple Store employees since the pandemic, it's mainly one of "Why are you here?" Maybe this employee wanted to take advantage of the rare opportunity to do something other than retrieving people's pick-up orders and actually try to sell something, but this is deeply untypical for shopping at the Apple Store.
Oh it gets better than that, I walked into the store and asked to buy a MacBook Air.
The first clerk disappears, and some kid who is roughly 19 starts lecturing me about how much better the pro is. I politely respond, I just want to buy the Air.
He insists, 'well , do you want to make music '. I respond, 'please sell me the Air'. At this point he's not budging. I ask a final time, and ask why are you making this interaction so difficult.
Him: 'well you're making it difficult'.
I walk out and go to Best Buy. At Best Buy I simply asked to buy an Air, and I was out in 5 minutes.
Now truth be told, if the kid would have told me he needs to push a certain number of pros per month, I might have said okay and brought one. But instead he decided to insult me, I even explained that as a software engineer I knew exactly what I was talking about. I shouldn't need to explain anything when I'm trying to buy a product, it's none of your business if I prefer an M1 air because I routinely dropped my laptops. If it's a gift for someone else, or in reality it does the job I need it to do.
I'm legitimately never going into an Apple store again after this.
Well, do be aware... I don't think that Best Buy _technically_ pays commissions based on sales, but they do often have reps from brands around who will try to sell you heavily on their product (e.g. Samsung reps.)
I've also heard stories that while you won't get a commission, you may get more perks at work for higher sales numbers.
In any case, your experience at Apple sounds insane.
Best Buy isn't perfect, but in general they're much lighter on the 'advice' they try to give you. Their commission is in selling useless warranties, if a clerk does a good job I'll buy one as a tip.
There's no commission at Best Buy. IIRC, Circuit City was the last major US-based electronics retailer to end commission-based sales, and that happened in... 2004, maybe? Something like that.
Employees are judged on warranty sales, and when I worked at Circuit City back in the days when they, uh, existed, we were also judged based on profitability of sales.
That is shocking to me, and you'd be doing everybody else a favor if you let the store know about it, so that guy can be terminated or at least retrained. I've never had an experience anything like that, and I know that's not the norm at Apple stores. Wow!
Ohh that's just mean, I'm not trying to get anyone fired. I'll just never shop at an Apple store again. I'm sure plenty of people walk in wanting to spend the least amount possible.
Then end up leaving with a 2500$ computer, no big deal it's only 200$ a month.
You certainly have no responsibility at all to help a multi-trillion dollar company fix themselves! Nor to ever shop with that company. You do you!
That said, I hope my comment and the subsequent upvotes make it clear that your experience seems very unusual. I have never felt pressured to buy anything on my numerous visits, and was even talked into buying a cheaper option of two things I considered once, and another time it was suggested I go to Best Buy rather than buy anything from Apple.
They're not paid commission to avoid situations like the one you described, so it's really strange to me that happened. That's all!
Other comments down stream indicate they do have KPIs. Maybe the kpis are for financing, I'm not sure. Someone who goes into a store only looking to buy a MacBook Air is probably doing so because of cost.
So logically you want to push as many people into buying more if you want to sell the financing.
Regardless, the entire point of BNPL is to encourage you to buy more than you need.
What's weirder about this is that... most 'pros' really need more than stock stuff you can get at a retail store anyway. If you need an M2 MBP, you probably want it to be 64g or 96g, and probably want 2tb storage. I've never seen anything but stock/base configurations at retail stores (best buy, apple, etc). Perhaps they occasionally have variations? Or the stores I've been to are just... lower on the priority list for top-end configurations?
> Now truth be told, if the kid would have told me he needs to push a certain number of pros per month, I might have said okay and brought one.
Which is why they nag you. I don't really understand this mindset but there's no question it exists. And there's no question the paperclip machine will have its goddamn paperclips.
Probably the 19yr old will eventually get turned into Solyent and replaced with a more polite/savvy version - and you will succumb and buy a pro you don't need just to be nice. And numbers will tick upwards.
I get trying to upsell you, but why would you turn down a sale? Make the suggestion and then let the customer purchase whatever they want. A sale is a sale, no?
This is what they used to be good at - not trying to sell you too hard.
I guess that has changed - I also had several strange unpleasant interactions lately. Either difficulty buying something, or annoyance being sold on something more or something else.
> Seems predatory towards people who are buying stuff they can't afford, otherwise I don't see how they make money (minus the overpriced laptop I just bought, I guess).
That's exactly why they're doing this, to get people who can't afford Apple's products to buy them anyway. Compare with what Tim Cook said in February:
> The price of the most expensive iPhone model has increased by more than half — from $962 to $1,600 since 2009 when adjusted for inflation — but Apple CEO Tim Cook doesn't appear worried about increasing prices.
> During an earnings call with investors on Thursday, Cook said he believes people are willing to pay more because the phone has become "so integral into people's lives."
> "I think people are willing to really stretch to get the best they can afford in that category," Cook said, responding to a question on whether the increasing average sales price over the last few years is "sustainable."
"Willing to really stretch" is just another way of saying "spending more than they should".
> Users will be asked to link a debit card from Wallet as their loan repayment method; to help prevent users from taking on more debt to pay back loans, credit cards will not be accepted.
So in addition to the soft pull requirement, it's clear this is almost exclusively targeted at people with good finances.
Not being able to use a credit card is a huger bummer though. Buying something like a macbook pro is a decent way to meet the minimum on a credit card with a signup bonus if you're not a high rolling spender normally.
One of the most valuable life lessons my parents ever taught me was "If you can't afford it now, you can't afford it at all."
YES, there is a time and place for financing (especially when interest rates were near zero and you have good impulse control) but the entire "buy now pay later" industry just reeks of preying on people that aren't as financially literate or have little impulse control, and I won't touch the companies with a ten foot pole.
Honestly a bit disappointing to see this from Apple.
Well it's actually boiled down to if you make money with your laptop. I guess most people on HN are programmers so of course they do. But the question is not good laptop vs crappy laptop, it's consumption vs investment.
I initially purchased my new iphone 12 in monthly installments, yes I could have paid for it outright, but I didn't see the point in paying ~1k upfront.
If you're referring to a carrier's zero interest payments on the full price of the phone, that's just smart. No penalty for borrowing. If there was interest involved, it gets fuzzier.
I'll amend this by saying that there's also another huge requirement for it to make sense: The new iphone must be necessary for any of this deal to make sense. If it was impulse bought because of this financing offer, then the financing has cost you >$1k
Last I checked, my carrier (T-Mobile) charges like 10% more than Apple for the same device. They're just baking the interest into the price, it's not really "no interest". Maybe the others don't do that, though, I dunno.
You think Apple is lying about this? Or you think that they are hoping that you miss payments and then they (a three trillion dollar company) are going to make a material amount of money on an interest penalty?
> Or you think that they are hoping that you miss payments and then they (a three trillion dollar company) are going to make a material amount of money on an interest penalty?
Maybe? I don't know how much banks make from this kind of thing. That "(a three trillion dollar company)" comment is so irrelevant that it's almost laughable tho. Banks are huge companies too, and they still make money from interest.
Yes, banks are large precisely because they make money this way. The point is that Apple makes huge amounts of money by selling tech products and services, and by having a loyal following. It would be surprising if they decided to trade some of that goodwill for a relatively (in their world) amount of cash.
Essentially, Apple. Goldman is getting their pay in transaction fees. Apple is hoping to increase the number of purchases made on Apple's products. You get cash back on each transaction, Goldman gets a percentage of each transaction, Apple just loses a tiny bit of their profit on the sale, but they still made the sale. The only issue then is that debt collection is more expensive. The truth, however, is that most people pay their debts.
If you have impulse control and can properly conceptualize a loan, it could be a useful tool. In my experience, however, these kinds of programs don't target responsible spenders. People are pretty bad at thinking about monthly cost in terms of total cost.
Totally agree that it's best for responsible people. But what is Apple's goal here — to increase the number of people/merchants using Apple Pay or hitting people with unexpected interest payments, which would sour them on the Apple brand? I would think that they're trying to grow their ecosystem, rather than make money while alienating customers. I could be wrong though — when times are tough, even good companies do lousy things.
I don't really think Apple's interest is in collecting interest on these payments, but I do think it will cause people to use Apple Pay more because it enables (perhaps encourages) them to buy things they otherwise wouldn't buy. That can be good or bad depending on the circumstances, I just expect this will be frequently utilized in an "impulse buy" sort of way because it creates an illusion of affordability.
The BNPL industry isn't some big charity. They offer such deals to hook people in, knowing that a huge chunk of them will miss payments and then they can hit them with interest and fees.
Exactly. However, I think a bigger advantage of this business model is that it simply sells more stuff. It’s way easier to look at your monthly take home income and justify $100 per month for 12 months than a 1 time purchase of $1200. However, the problem is when you make those justifications, it becomes easier to make 10 of those purchases and achieve a debt-income ratio of 5.0 instead of budgeting and keeping a lower debt-income ratio over time.
> It’s way easier to look at your monthly take home income and justify $100 per month for 12 months than a 1 time purchase of $1200.
I think you should note that for apple, they are splitting payments into 4 over 6 weeks. So your example wouldn't fit the discussion we're having here.
Thank you. That is exactly how people do in countries where splitting payments have been established and common for a long time, making everybody live on the edge in order to prop up consumer spending.
If you actually save your money to only buy things when you can afford them, you can more easily purchase more expensive stuff with cash, since you've already saved up a chunk, and you are also much better prepared for unexpected costs.
The lesson I taught myself is to amortize everything so it's thought of as $/time. An upfront purchase has an opportunity cost.
Also, most people can't pay for a house upfront. Mortgages are effectively govt-subsidized, so you usually want one anyway. I directly care what the house will cost me per month, and the bid price is only part of that.
I used to have this opinion, and I try to take as little debt as possible. However, I've change my opinion in recent years, and I now think it's based on a privileged position that not everyone is in.
Buying a new phone today rather than once I've saved up is a luxury, but buying a replacement phone today rather than being without a phone for ~months while saving up could bring with it significant costs – making it harder to access employment, healthcare, or to socialise. Similar examples would be things like car repairs.
Cash flow is worth something, businesses have known this forever, and people living paycheck to paycheck are typically experts in how to make their money work as well as possible because they're so close to the edge. I trust them that if they think this is the best option for them, it probably is. Payday loans are in the same category here (and businesses call them "commercial paper").
Now, I'd love to live in a society where this isn't necessary, but that's not the world we live in, so I'm in favour of these things being available for those who need them.
A more practical version of this rule is "don't use long term debt to pay for short-term expenses"
When buying a car, or house, or maybe something like a phone that you will use continuously for a number of years, you can make an argument that it's OK to pay for that item over the same time period.
Where people get into more trouble is buying consumable stuff like clothes, food, etc. on to a credit card that they don't pay off every month, and then they end up paying for a box of macaroni or package of underwear over many years (at typically double-digit interest rates).
Payday loans are in the same category but in terms of predatory financial options i feel as though they are a million times worse. I even question how apps like Dave work on this type of model.
I agree in spirit but buying things in installments is just a reality here in Brazil and in a lot of other countries.
It's a loan like any other. When used correctly it can be a democratizing function for people who are poor but need important things like phones, fridges, and stoves.
I haven't traditionally made use of services like this, but am I correct in that one might be able to make small gains with them, much as is possible with credit cards?
For example if there's a large purchase one needed to make and had the cash on hand for, wouldn't it be smarter to let most of that cash accrue some interest in one of the many 4%+ interest savings accounts now available while making payments on the 0% interest BNPL?
In theory yes, but this is way less beneficial than just using a credit card.
The average maturity date on Apple (and others) BNPL is 3 weeks. Credit cards have a minimum payment deadline of 3 weeks from the statement without accruing interest, and on average you'll get another 2 weeks on top of that depending on when in the cycle you made the purchase. So you're getting at least the same average time to accrue interest, plus you're getting credit card rewards of 1-5%.
I’ve used the existing payment thing to buy a MacBook Pro on my Apple Card back in 2021. I mean at 0% interest seems like it’s all in your favor if you’re not spending like a dumbass.
I am surprised to see Apple getting into the "buy now, pay later" game, as it's always seemed like a murky industry that works by exploiting poor people who aren't very good with money, and not something I'd expect Apple to want to be associated with. Can anyone steelman it for me? Is there a way of looking at this industry/practice other than "exploitative and predatory"?
A credit card lets me delay payment for a month otherwise it’s 30% interest. These schemes let me delay for multiple months for free otherwise it’s 8% interest.
I feel like Apple has lost their way with the focus on services.
If they are going to focus on services, they should make them best in class. I expect best in class software, but Apple Music still doesn’t have anything like Spotify Connect and it is still incredibly slow and unreliable software (for what it is).
I don’t understand how tarnishing the premium brand with BNPL is worth it long term. And I especially don’t understand how all of their 0% interest offers will make sense in a world of 5+% interest rates.
They've been taking the shotgun approach for a while. Their product isn't any individual component, it's the platform as a whole. Why people want a company that sells:
- Phones
- Computers
- Tablets
- Headphones
- AR headsets
- Cars
- Watches
- Streaming boxes
- Speakers
- Email
- Video streaming subscriptions
- News aggregation
- Fitness routine subscriptions
- Music streaming subscriptions
- Video game subscriptions
- eBooks
- Apps
- Cloud storage
- Credit cards
- BPNL
is completely beyond me. Yes there's stuff in there they haven't announced. Yes there are a lot of accessories and services not listed.
I'm probably a Microsoft shill at this point, but I am a .NET dev running Windows and I have a Microsoft 365 family subscription and bought an Xbox. All of my hardware is from other manufacturers. My finances are not tied to MS. I can't think of another company that has gotten the amount of blind trust that Apple has.
This business practice seems to have become popular lately. It really gives me a bad feeling, probably because the idea of getting your customers into debt (to your own company) in order to buy your products just seems wrong at a fundamental level. I don't want to live in a world where everything is either rented or paid for with a loan.
I can obviously understand why it makes sense from a strictly money point of view, but what is the business strategy against this? All I can think of is pushing a brand message that is explicitly anti-debt and builds its reputation on treating its community of customers well.
Most people are extremely irresponsible with their money, which means that they don't have much disposable cash. So you will lose sales if you can't offer financing to them. No individual will want to have more than 1 Iphone, so once you've sold to those who can afford it or have the discipline to save up for it, you'll have to find a way to sell to those who can't afford and don't have the discipline. Prepare for all consumer goods in America and Europe to be offered on Buy-Now-Pay-Later plans as standard within 3 years.
Feels to me that something like this cheapens Apple's brand.
I don't mean to imply that they had an expensive brand and this changes the demographic (I hate businesses like that), I mean their brand, as far as I can tell, is "high quality, thought through, and works well".* This feels like they are exploiting their existing customer base.
* Pls don't argue if you disagree on the actual quality or whatever. This is about how it looks to me that they position themselves. Feel free to argue about how they might be positioning themselves :-)
I agree completely. Maybe it's just nostalgia, but I really cannot imagine Apple doing this under Steve Jobs' management. He would have rejected it simply for seeming tacky and reminiscent of products in low quality industries.
I was thinking the same thing. My understanding was prior to iPhone, phones were purchased outright, typically costing a couple hundred dollars, and there wasn't such a thing as paying off the phone as part of your monthly cell phone bill.
I have always purchased my phones outright, but am curious if there are fees, interest, or a higher total cost of payments via financing (fees and interest on missed payments).
That's the only justification I could use to say "maybe Steve would be good with it".
> I was thinking the same thing. My understanding was prior to iPhone, phones were purchased outright, typically costing a couple hundred dollars, and there wasn't such a thing as paying off the phone as part of your monthly cell phone bill.
This was absolutely a thing before the iPhone. Many carriers offered Blackberries, Palm Treos, and even higher end dumbphones and featurephones at discounts when you signed a service contract.
They already cheapened their brand beyond this when they created a credit card. CC is another form of BNPL, but more importantly, it's the most gimmicky business out there.
They did not create a credit card. Goldman Sachs (GS) does all the financial work, and gives Apple a cut for the branding.
Same thing here. GS is doing the underwriting, Apple is just providing the tech to be able to access the customer at the point of sale and make a split second automated offer for GS to lend money.
Edit: I was wrong about GS doing the underwriting. The website states:
>Apple Pay Later is offered by Apple Financing LLC, a subsidiary of Apple Inc., which is responsible for credit assessment and lending. Apple Financing plans to report Apple Pay Later loans to U.S. credit bureaus starting this fall,5 so they are reflected in users’ overall financial profiles and can help promote responsible lending for both the lender and the borrower.
Basically every single retail business brands a credit card. What difference would it make? Every airline, hotel, and retail store offers their own branded cc. Even Costco does, and that is about as high of brand reputation as you can get.
Yes, exactly. Those aren't seen as tech companies. Apple has cheapened their brand to that of an airline or hotel, or Costco at best. It's not terrible, but it's not the visionary company it used to be.
Branded financing options have nothing to do with brand prestige. Luxury car brands do it. High fashion houses do it. High street department stores have been doing it longer than either of us have been alive. It doesn't turn anyone off to a brand.
My take is that the real business opportunity for Apple here is fraud reduction, not just the Apple branding.
The biggest cost to any credit card provider is fraud, which they have to cover. Credit card fraud is $100B+/year. The Apple Card requires an iPhone and by leveraging iOS they can cut down on fraud. This lets them negotiate a better cut of the revenue from Goldman Sachs.
I suspect the iPhone integration even cuts down on fraud when you use the physical Apple Card directly. Leveraging location and activity data from your paired iPhone/Apple ID probably gives them many useful signals for fraud prevention. And you'll notice that Apple seems to have extra logic for detecting jailbroken iPhones when you try to sign up for the Apple Card or add it to your wallet. (App Store and various other Apple services still work, but not the wallet/Apple Card related features when jailbroken)
Maybe, but I think if that were really the case, they would have at least offered 2% cash back on all purchases to be competitive with other credit cards. That is the baseline free credit card that anyone credit card worthy can get.
Apple Card does offer 2% cash back on all purchases! But only when you pay use an Apple Card via Apple Pay, not when you pay with the physical card. I suspect this is because when Apple Pay is used they have particularly good fraud prevention allowing them to offer this in that case.
Lots of other cards give 2% cash back without Apple Pay and Apple’s advantages in fraud prevention, so I would expect Apple to be able to offer even more cash back if they wanted to attract other credit card users.
See my other comment, but I just read that when you use Apple Card + Apple Pay together they give you 2% cash back. To me this really seems like more evidence that the fraud prevention of Apple Card + Apple Pay works well enough they can make this offering.
This is nothing new. Apple's been in the BNPL finance game since the original iMac was introduced - so if they're tarnishing the brand, they've been doing it since they completely rebooted the brand.
In 1998, you could finance a G3 iMac with a loan for ~70 months of $29 payments. They also started up a store-only credit card finance option sometime in the early aughts via Barclays.
I'm aware that they've always offered financing, as many do, but it wasn't branded as a product like the Apple Card is. The product was the iMac. This time, the product is the card itself, complete with a brand name and heavy advertising. They're likening themselves to Citibank or Walmart.
Is there some sort of insurmountable tech debt over at Apple that requires these slow rollouts and long development cycles? They announced Pay later at WWDC 2022, and it's just now releasing, and the Savings account was announced in October and would be available "in the coming months", but is only just now (likely) coming out - and given Pay Later is still limited release, I imagine the savings account feature will be as well.
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[ 4.6 ms ] story [ 287 ms ] threadMy big concern with using some of these "pay later" types of services is that it seems incredibly risky to your credit score even if you do everything right and pay it off on time.
If Apple or anybody else can clarify on this point, that would be great. Otherwise, I'd never touch this.
That essentially lowers your credit card limit by the payment amount for the lifetime of the loan.
If any single payment fails, they will then try and go for the remainder.
Couldn't using this reduce the average age of your accounts, which is a big factor in credit score calculation?
sad that Apple has had to resort to "financializing" their own customer base
I don't see anything surprising or new about this other than that Apple has an easier way of managing that loan than a book of paper that you ripped one out each month and sent it in along with a paper check.
> Apple Pay Later is offered by Apple Financing LLC, a subsidiary of Apple Inc., which is responsible for credit assessment and lending.
#1, no, I don't want to spread my $50 worth of sushi out over 4 months
#2, if you do need to do that, maybe you shouldn't be ordering from Uber eats?
It seems extremely parasitical. I'm equally bothered that these companies are doing this and that some consumers feel the need to do this (and think this is a good idea)...
lol wut. son, spend 10 minutes reading about payday loans, many of the big economic crashes, shady practices by banks, and crypto. fintech isn't a thing, it's just a way to enable already existing behaviors that finance does all the time; it's always been predatory.
https://www.howtogeek.com/778355/new-study-says-87-of-us-tee...
It seems like many of them act like credit cards and charge the merchant a percentage, since they “drive consumption” and encourage people to buy stuff. Of course, this fee will likely be added into the price that all consumers pay, so as these get bigger, we all will be subsidizing interest free loans to people in the form of 1%-3% higher prices. Much like credit cards are today.
The commercials for Apple Pay have me thinking the exact opposite.
* People with good credit don't need to manage their monthly credit payment. They simply pay it all off.
* People with good credit also don't really need to apply for an emergency credit card (unless they happen to forget their wallet).
My impression is many of these products are akin to loan sharks. They loose/break even on "good" borrowers, but make loads on people who are "so close" to being able to fully repay.
It also allows the sellers to increase their prices or even simply upsell without pricing out their own consumer base.
The value proposition to me seems to be that they sold a bike at 3500$ they would not have sold otherwise and they can deal with the payment being made over time rather than all at purchase time.
For the user the value proposition is that value adding purchases like this can be made and paid off while they provide value.
I might have expressed this poorly, but it wasn’t an “investment in the future”. And that’s exactly what made it interesting. The monthly costs where lower immediately, since the cost of transport which was saved was higher than the monthly cost to pay for the bike. It was just a straight up cost reduction due to the structure of the payment. Had the zero interest monthly payments not been available then it would have been the more typical “investment/ROI over time” situation, and there might be an argument for it still being beneficiary to go into debt to make the purchase because over the long run it would pay of again. But the payment structure just makes everything a thousand times simpler.
https://en.wikipedia.org/wiki/Ford_Motor_Credit_Company
https://en.wikipedia.org/wiki/Discover_Card
USA is bad but not the worst, this is a global plague
The other reply to your comment is pretty instructive. There appears to be a positive correlation between how wealthy a country is and how high the household debt load is.
What's the business model for all these BNPL companies if they have zero fees and zero APR?
Are they counting on some % of users requiring extensions?
Are they getting a % of transaction value as fees?
Yes, this. And it's worth it for the merchant because they make more sales. patio11 has a good article about it: https://www.bitsaboutmoney.com/archive/buy-now-pay-later/
https://www.bitsaboutmoney.com/archive/buy-now-pay-later/
Amazon does the same - you can buy a thing with 0% APR in 6 monthly payments, but you lose your Amazon card 5% cash back.
>BNPLs pitch themselves to businesses as more marketing efforts and less simple payments rails. They’re more expensive than cards by about 300 bps.
I assume this is all the same as Goldman Sachs’ Apple credit card. The same payment fees from merchant to Goldman Sachs, and then Apple might get a little too. Since Goldman is taking all the underwriting risk, I would be surprised if Apple is getting the lions’ share.
Apple’s reward is their devices becoming more popular among people who cannot get credit cards and might find utility in Apple BNPL.
I assume the merchant fees are the same either way.
That would reduce the appeal a little. And that's different than their own-store policy on their card -- if you buy from Apple with an Apple Card on the installment plan, you get the 0% for 12 months or whatever, and you get the 3% cash back too.
Thanks for the 2% comment, by the way. Made me go look, since I only recall it being 1% (for most things). Turns out it's 2% whenever I use my Apple Watch to do the transaction. Works for me!
It's not a lot of credit since you have to pay it back pretty quick, but it does have a similar benefit to paying with a credit card and then paying the monthly statement.
So in return for a high rate (merchant fee for AfterPay here in Australia is 4+%) the merchant gets guaranteed payment and no chargeback risk. The BNPL service makes money on the merchant fees and on the fact that this lending appeals to young people and those with low credit scores.
It's an extension of what used to be called "lay-by" here, but in that case, the merchant wouldn't release the item until it was paid in full.
But I'm with you, I don't see it as a big deal. I routinely take advantage of the 'no interest installment plan' for my Apple toy purchases on my Apple card. Why wouldn't I want to hold off on giving them my money for as long as possible, especially in an inflationary environment?
I don’t typically finance anything I can’t afford to buy outright. I just like to feel like I have extra breathing room in the case of some emergency.
BNPL usually don't target these people.
If it's not the merchant paying for the loan, the story is very different though.
In the best case, these are pointless services that only transfer money to the finance industry. In the worst case, they incentivize people to spend money on things they can’t afford (and also transfer money to the finance industry).
If you pay a credit card in full, you also don't pay interest, and you usually get at least a month to do so as well.
If you don't pay on time, though, you lose big – with both credit cards and BNPLs.
To me this seems like a recipe for trouble, I'll stay away from it.
There's also a part of my brain that jumps to: "if you missed a payment, would they just lock you out of your laptop by some remote command?", though there is no indication of this, and it seems unlikely (as of now).
Seems predatory towards people who are buying stuff they can't afford, otherwise I don't see how they make money (minus the overpriced laptop I just bought, I guess).
> After the intro period, a variable APR of 19.49%–28.24%
I suppose it isn't an issue if you pay your card off every month, but that's a high APR.
The use case here seems to be people who would not actually be able to pay this off in a month.
the target is uneducated (in the financial sense) consumers who are enticed into making purchases they might otherwise not make (and probably shouldn't make)
Apple probably wants to get at the consumers who are still buying cheap Android phones who will be bowled over by the psychology of splitting the purchase price into installments
I bought my M1 MBP using the financing they offer and it was 24 months, no interest, _and_ you do get the 3% back immediately upon purchase. They also set up the payment plan for you so you do not have to worry about missing a payment and getting charged interest you were intentionally avoiding.
It's a great option if you are on top of your finances, but the point remains that it can easily be used to live outside of your means.
The only downside of taking a 0% loan is if you're bad at finance and getting that loan makes you spend more. Either by buying something more expensive that you would without the loan, or buying more stuff with the money you didn't have to give upfront.
My only catch is this loan requires a soft credit report - I have a freeze on most of my credit scores (used to be there were only 3 now there are a few more). Even a soft pull will hit that barrier.
90% of people are fine with an M1 Air, the last time I went to an Apple store the sales clerk straight up refused to sell me one. He basically told me I didn't know what I was talking about and kept trying to sell me a pro.
I asked him 3 times to sell me an Air, and ended up leaving in frustration. Not before he pitched buying a pro on an Apple line of credit instead.
If I come into a store and tell you what I want to buy, we're not having a conversation. You have no idea what or who I'm buying it for.
Best Buy doesn't do this, I was able to get my Air without an argument and walk out.
If anything, this pay later stuff will make the issue worse. You'll go into the Apple store to be told you might as well get the most expensive thing they have in stock, it's zero down anyway!
I have a Chromebook I bought in 2018 for something like $200, and it's "fine" for gmail, online banking, youtube, and other casual stuff. I have an ssh app on it to use for work, and that's "fine" as well. Most people don't need more than this.
And a windows 11 craptop for $200. These things are absolutely completely insanely cheap.
It's been widely reported on the internet that Apple salespeople are not on commission, which is what makes the OP's story so curious.
Maybe it's changed since the pandemic.
It has also been widely reported that Apple invented USB-C and gave away for free, and All AirPod were sold at cost or at lost.
The No commission thing were from Steve Jobs era for pete sake. How long ago was that?
Depending on regions all Apple retail employees have KPIs. And we are coming close to 10 years since it’s first introduction.
The first clerk disappears, and some kid who is roughly 19 starts lecturing me about how much better the pro is. I politely respond, I just want to buy the Air.
He insists, 'well , do you want to make music '. I respond, 'please sell me the Air'. At this point he's not budging. I ask a final time, and ask why are you making this interaction so difficult.
Him: 'well you're making it difficult'.
I walk out and go to Best Buy. At Best Buy I simply asked to buy an Air, and I was out in 5 minutes.
Now truth be told, if the kid would have told me he needs to push a certain number of pros per month, I might have said okay and brought one. But instead he decided to insult me, I even explained that as a software engineer I knew exactly what I was talking about. I shouldn't need to explain anything when I'm trying to buy a product, it's none of your business if I prefer an M1 air because I routinely dropped my laptops. If it's a gift for someone else, or in reality it does the job I need it to do.
I'm legitimately never going into an Apple store again after this.
I've also heard stories that while you won't get a commission, you may get more perks at work for higher sales numbers.
In any case, your experience at Apple sounds insane.
Employees are judged on warranty sales, and when I worked at Circuit City back in the days when they, uh, existed, we were also judged based on profitability of sales.
Then end up leaving with a 2500$ computer, no big deal it's only 200$ a month.
That said, I hope my comment and the subsequent upvotes make it clear that your experience seems very unusual. I have never felt pressured to buy anything on my numerous visits, and was even talked into buying a cheaper option of two things I considered once, and another time it was suggested I go to Best Buy rather than buy anything from Apple.
They're not paid commission to avoid situations like the one you described, so it's really strange to me that happened. That's all!
So logically you want to push as many people into buying more if you want to sell the financing.
Regardless, the entire point of BNPL is to encourage you to buy more than you need.
Which is why they nag you. I don't really understand this mindset but there's no question it exists. And there's no question the paperclip machine will have its goddamn paperclips.
Probably the 19yr old will eventually get turned into Solyent and replaced with a more polite/savvy version - and you will succumb and buy a pro you don't need just to be nice. And numbers will tick upwards.
Why bother giving the customer what they want if there’s any chance they’d jump for the big one?
I guess that has changed - I also had several strange unpleasant interactions lately. Either difficulty buying something, or annoyance being sold on something more or something else.
People make poor decisions, a lot of people make poor financial decisions, what is a great tool when you're educated is a catastrophe for others
The new wave of "pay later" payment systems is clearly a way to artificially boost consumption in the short term
That's exactly why they're doing this, to get people who can't afford Apple's products to buy them anyway. Compare with what Tim Cook said in February:
> The price of the most expensive iPhone model has increased by more than half — from $962 to $1,600 since 2009 when adjusted for inflation — but Apple CEO Tim Cook doesn't appear worried about increasing prices.
> During an earnings call with investors on Thursday, Cook said he believes people are willing to pay more because the phone has become "so integral into people's lives."
> "I think people are willing to really stretch to get the best they can afford in that category," Cook said, responding to a question on whether the increasing average sales price over the last few years is "sustainable."
"Willing to really stretch" is just another way of saying "spending more than they should".
So in addition to the soft pull requirement, it's clear this is almost exclusively targeted at people with good finances.
Not being able to use a credit card is a huger bummer though. Buying something like a macbook pro is a decent way to meet the minimum on a credit card with a signup bonus if you're not a high rolling spender normally.
Same way like you cannot pay your mortgage with a credit card.
YES, there is a time and place for financing (especially when interest rates were near zero and you have good impulse control) but the entire "buy now pay later" industry just reeks of preying on people that aren't as financially literate or have little impulse control, and I won't touch the companies with a ten foot pole.
Honestly a bit disappointing to see this from Apple.
I'll amend this by saying that there's also another huge requirement for it to make sense: The new iphone must be necessary for any of this deal to make sense. If it was impulse bought because of this financing offer, then the financing has cost you >$1k
no interest 12/24 month payment tied to apple card.
> Apple Pay users can split purchases into four payments with zero interest and no fees
No of course not. I'm not saying Apple is lying.
> Or you think that they are hoping that you miss payments and then they (a three trillion dollar company) are going to make a material amount of money on an interest penalty?
Maybe? I don't know how much banks make from this kind of thing. That "(a three trillion dollar company)" comment is so irrelevant that it's almost laughable tho. Banks are huge companies too, and they still make money from interest.
Seems like a good deal – Apple is giving away money for free, especially given current interest rates.
https://www.bitsaboutmoney.com/archive/buy-now-pay-later/
I think you should note that for apple, they are splitting payments into 4 over 6 weeks. So your example wouldn't fit the discussion we're having here.
If you actually save your money to only buy things when you can afford them, you can more easily purchase more expensive stuff with cash, since you've already saved up a chunk, and you are also much better prepared for unexpected costs.
Also, most people can't pay for a house upfront. Mortgages are effectively govt-subsidized, so you usually want one anyway. I directly care what the house will cost me per month, and the bid price is only part of that.
Buying a new phone today rather than once I've saved up is a luxury, but buying a replacement phone today rather than being without a phone for ~months while saving up could bring with it significant costs – making it harder to access employment, healthcare, or to socialise. Similar examples would be things like car repairs.
Cash flow is worth something, businesses have known this forever, and people living paycheck to paycheck are typically experts in how to make their money work as well as possible because they're so close to the edge. I trust them that if they think this is the best option for them, it probably is. Payday loans are in the same category here (and businesses call them "commercial paper").
Now, I'd love to live in a society where this isn't necessary, but that's not the world we live in, so I'm in favour of these things being available for those who need them.
When buying a car, or house, or maybe something like a phone that you will use continuously for a number of years, you can make an argument that it's OK to pay for that item over the same time period.
Where people get into more trouble is buying consumable stuff like clothes, food, etc. on to a credit card that they don't pay off every month, and then they end up paying for a box of macaroni or package of underwear over many years (at typically double-digit interest rates).
Cars depreciate at a frightening rate.
It's a loan like any other. When used correctly it can be a democratizing function for people who are poor but need important things like phones, fridges, and stoves.
They can't raise prices on the latest iGoodies if no one can afford to buy them.
Buy Now Pay Later can ensure users "can afford" the latest iGoodies instead of having to wait for the price drops on not-the-newest iGoodies.
They are being innovative and enabling their own business to succeed despite the current economic conditions.
For example if there's a large purchase one needed to make and had the cash on hand for, wouldn't it be smarter to let most of that cash accrue some interest in one of the many 4%+ interest savings accounts now available while making payments on the 0% interest BNPL?
The average maturity date on Apple (and others) BNPL is 3 weeks. Credit cards have a minimum payment deadline of 3 weeks from the statement without accruing interest, and on average you'll get another 2 weeks on top of that depending on when in the cycle you made the purchase. So you're getting at least the same average time to accrue interest, plus you're getting credit card rewards of 1-5%.
This is for people who cannot get approved for a credit card.
> [users want] flexible payment options
Being able to spread some large purchase over multiple pay periods seems like a obvious use case.
But sure, it's exploitative, they want a piece of that already existing cake.
It’s 1000% better
If they are going to focus on services, they should make them best in class. I expect best in class software, but Apple Music still doesn’t have anything like Spotify Connect and it is still incredibly slow and unreliable software (for what it is).
I don’t understand how tarnishing the premium brand with BNPL is worth it long term. And I especially don’t understand how all of their 0% interest offers will make sense in a world of 5+% interest rates.
- Computers
- Tablets
- Headphones
- AR headsets
- Cars
- Watches
- Streaming boxes
- Speakers
- Email
- Video streaming subscriptions
- News aggregation
- Fitness routine subscriptions
- Music streaming subscriptions
- Video game subscriptions
- eBooks
- Apps
- Cloud storage
- Credit cards
- BPNL
is completely beyond me. Yes there's stuff in there they haven't announced. Yes there are a lot of accessories and services not listed.
I'm probably a Microsoft shill at this point, but I am a .NET dev running Windows and I have a Microsoft 365 family subscription and bought an Xbox. All of my hardware is from other manufacturers. My finances are not tied to MS. I can't think of another company that has gotten the amount of blind trust that Apple has.
I can obviously understand why it makes sense from a strictly money point of view, but what is the business strategy against this? All I can think of is pushing a brand message that is explicitly anti-debt and builds its reputation on treating its community of customers well.
I don't mean to imply that they had an expensive brand and this changes the demographic (I hate businesses like that), I mean their brand, as far as I can tell, is "high quality, thought through, and works well".* This feels like they are exploiting their existing customer base.
* Pls don't argue if you disagree on the actual quality or whatever. This is about how it looks to me that they position themselves. Feel free to argue about how they might be positioning themselves :-)
I have always purchased my phones outright, but am curious if there are fees, interest, or a higher total cost of payments via financing (fees and interest on missed payments).
That's the only justification I could use to say "maybe Steve would be good with it".
This was absolutely a thing before the iPhone. Many carriers offered Blackberries, Palm Treos, and even higher end dumbphones and featurephones at discounts when you signed a service contract.
Same thing here. GS is doing the underwriting, Apple is just providing the tech to be able to access the customer at the point of sale and make a split second automated offer for GS to lend money.
Edit: I was wrong about GS doing the underwriting. The website states:
>Apple Pay Later is offered by Apple Financing LLC, a subsidiary of Apple Inc., which is responsible for credit assessment and lending. Apple Financing plans to report Apple Pay Later loans to U.S. credit bureaus starting this fall,5 so they are reflected in users’ overall financial profiles and can help promote responsible lending for both the lender and the borrower.
The biggest cost to any credit card provider is fraud, which they have to cover. Credit card fraud is $100B+/year. The Apple Card requires an iPhone and by leveraging iOS they can cut down on fraud. This lets them negotiate a better cut of the revenue from Goldman Sachs.
I suspect the iPhone integration even cuts down on fraud when you use the physical Apple Card directly. Leveraging location and activity data from your paired iPhone/Apple ID probably gives them many useful signals for fraud prevention. And you'll notice that Apple seems to have extra logic for detecting jailbroken iPhones when you try to sign up for the Apple Card or add it to your wallet. (App Store and various other Apple services still work, but not the wallet/Apple Card related features when jailbroken)
In 1998, you could finance a G3 iMac with a loan for ~70 months of $29 payments. They also started up a store-only credit card finance option sometime in the early aughts via Barclays.
Saturday Night Live had it spot on years ago: https://youtu.be/R3ZJKN_5M44