The beta code for the first version of iOS 16 has already leaked a new HomePod and a potentially exclusive iPhone 14 Pro upgrade, but it also contains a feature that users have been warned about.
Posting on The Conversation, Rajat Roy, Associate Professor at Bond Business School, Bond University, warned iPhone and iPad owners that the new ‘Apple Pay Later’ service built into iOS 16 has potentially serious financial consequences, especially for your credit rating.
In Apple’s own words: “Apple Pay Later offers users in the United States a transparent and secure way to split the cost of an Apple Pay purchase into four equal payments over six weeks, with no interest or fees of any kind. so… Apple Pay Later is available wherever Apple Pay is accepted online or in-app, using the Mastercard network.”
That sounds handy, and Roy notes that Apple stands to make significant revenue from this “zero-interest” service and learn a lot about its users’ spending habits:
“As Apple customers begin to use the Pay Later service more and more, they will benefit from merchant fees. These are fees that retailers pay Apple in exchange for the ability to offer Apple Pay customers. In addition, Apple will also gain valuable insight into consumer buying behaviors, which will allow the company to predict future consumption and spending behaviors.”
But Roy argues that the harsh reality of Apple Pay Later is that it opens the door for everyday users into the murky world of unregulated finance that “doesn’t bode well for all customers.”
“Younger demographic groups (like Gen Z and Millennials) and low-income households may be more vulnerable to the risks associated with using these services — and may take on debt as a result,” says Roy. “From a consumer psychology perspective, these services encourage immediate gratification and put young people on the consumption treadmill. In other words, they can continually spend more money on purchases than they can afford. actually afford it.”
Roy notes that the evidence is compelling, with a 2021 survey finding around 26% of regular online shoppers in Australia used buy now, pay later (BNPL) services.
And it can be a slippery slope. Roy warns that missing payments on Pay Later programs will negatively impact an individual’s credit rating “which can then have negative outcomes such as ineligibility for traditional loans or credit cards.”
All of this raises the question of whether BNPL services should be seamlessly integrated into a product used by millions of users, many of them children and young adults, and offered to them at checkout.
As the launch of iOS 16 approaches and its release coincides with the arrival of new, more expensive iPhones, the debate around Apple Pay Later will undoubtedly heat up. And it should.
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