- Ratcha Roy
Apple has joined the burgeoning “buy now, pay later” business with a dedicated service called Apple Pay Later.
The payment will later be integrated into the Apple Wallet or Wallet app and can be used on any purchase made through Apple Pay.
users He will be able to divide the purchase cost into four equal paymentswithout interest or commissions, distributed over a period of four months.
However, Apple will first run a flexible credit check for users who wish to use the service.
The tech giant claims that it designed the feature with the “financial health of users” in mind.
Apple is likely trying to establish itself in the world of consumer finance and increase its profitability.
and consumers You should be aware of the risks of using this new service.
Apple: Consumer Favorite
With the launch of Pay Later, Apple will compete with other similar fintech companies, including PayPal, Block, Klarna, AfterPay, and some They saw their share price drop After announcing the new service.
Apple has its huge market, brand strength, and ability to attract millions of people to its products and services.
And with its focus on customer experience, Apple has been able to foster a community of ardent fans. There is no doubt that the company is one of the favorite brands of consumers.
It also created Apple An ever-growing ecosystem Users are encouraged to access Apple products and services as much as possible, for example, by making payments through an iPhone instead of a bank card.
The tech giant offers ways to integrate previously discrete computing capabilities into a phone or wristwatch, while keeping an eye on the consumer experience.
Paying later enhances this customer-centric experience. It is another way in which users can integrate all the tools they need into one ecosystem.
What is the benefit of Apple?
Apple can make money with Pay Later.
iPhone-based payment services are accepted by 85% from American retail companies.
A 2021 survey found that about 26% of online shoppers in Australia, for example, used “buy now, pay later” services.
As Apple customers increasingly start using the Pay Later service, the giant will benefit from merchant fees, the payments that retailers make to Apple in exchange for their ability to offer Apple Pay to customers.
The company also Gain valuable insights into consumer buying behaviorsThis will allow you to predict your preferences and future expenses.
To offer the “buy now, pay later” service, Apple has joined forces with Goldman Sachs, which will finance the loans.
This relationship has been in place since 2019. Goldman Sachs has acted as a partner for the Apple credit card (although Pay Later is not associated with this card).
It is a strategic partnership that helped Apple win strong position in the world of consumer finance.
Challenges facing consumers
The truth is that the unregulated world of finance, which involves buy now, pay later, does not bode well for all consumers.
Younger demographics (such as Generation Z and Millennials) and lower-income families may be more at risk to the risks associated with the use of these services and, as a consequence, end up accumulating debt.
Purchases through “buy now, pay later” schemes can be driven by the desire to own the latest gadgets and luxury goods, fueled by clever marketing campaigns.
Such schemes can accustom consumers to purchase without the pain of being separated from cash.
From a consumer psychology perspective, these services Boost instant gratification Young people are attracted to the routine of consumption.
In other words, they may be constantly spending more money on purchases than they actually can.
On the other hand, if the consumer does not pay a fee in later payment, then this It will negatively affect your credit ratingwhich can have negative consequences when applying for conventional loans or credit cards.
Focusing on consumer behavior can also lead to the so-called ‘ownership effect’. The term refers to the fact that people can associate with their purchases and are less likely to return them, Even if they can’t afford it.
Technology-driven, consumer-focused marketing gives Apple an edge over other “buy now, pay later” schemes.
The company ensures that the new service has been designed with consumers’ financial health in mind.
But as with any of these services, consumers should be realize the risks And handle it with caution.
*This article was originally published in The Conversation. You can read the original over here.
Rajat Roy is Associate Professor at Bond School of Business at Bond University in Australia.
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