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Beta code from the first release of iOS 16 has already leaked a new HomePod and a potentially exclusive iPhone 14 Pro upgrade, but it also contains a feature users have been warned about using.

Posting on The Conversation, Rajat Roy, Associate Professor of the Bond Business School, Bond University, has warned iPhone and iPad owners that the new ‘Apple Pay Later’ service baked into iOS 16 has potentially serious financial consequences — particularly for your credit rating.

In Apple’s own words: “Apple Pay Later provides users in the US with a seamless and secure way to split the cost of an Apple Pay purchase into four equal payments spread over six weeks, with zero interest and no fees of any kind… Apple Pay Later is available everywhere Apple Pay is accepted online or in-app, using the Mastercard network.”

It sounds convenient and Roy notes Apple stands to make significant income from this “zero interest” service as well as learn a lot about its users’ spending patterns:

“As Apple’s customers increasingly start to use the Pay Later service, it will gain from merchant fees. These are fees which retailers pay Apple in exchange for being able to offer customers Apple Pay. In addition, Apple will also gain valuable insight into consumers’ purchase behaviours, which will allow the company to predict future consumption and spending behaviour.”


But Roy argues that the harsh reality of Apple Pay Later is it opens the door for everyday users into the murky world of unregulated finance which “does not bode well for all customers.”

“Younger demographics (such as Gen Z and Millennials) and low-income households can be more vulnerable to the risks associated with using these services – and can rack up debt as a result,” Roy explains. “From a consumer psychology perspective, these services encourage immediate gratification and put younger people on the consumption treadmill. In other words, they may continually spend more money on purchases than they can actually afford.”

Roy notes that the evidence for this is compelling, with one 2021 survey finding that approximately 26% of regular online shoppers in Australia used buy now, pay later (BNPL) services.

And this can be a slippery slope. Roy warns that missing payments on Pay Later schemes will negatively impact an individual’s credit rating “which can then have adverse outcomes such as not qualifying for traditional loans or credit cards.”

All of which raises the question of whether BNPL services should be seamlessly baked into a product used by millions of users, many of which are children and young adults, and offered to them at checkout.

As the launch of iOS 16 nears and its release coincides with the arrival of new, higher-priced iPhones, the debate around Apple Pay Later will no doubt intensify. And it should.


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