Apple Introduces Buy Now, Pay Later Service

Apple is launching “Apple Pay Later,” a digital loan with the Apple brand. “Apple Pay Later” allows users to split online Apple Pay purchases into four payments over six weeks with zero interest and fees. This new product is currently only available to customers invited to access a prerelease version. While a credit card purchasing with a payment plan is not new in the financial industry, this is Apple’s first venture into the market.

Also, Apple launched its new high-yield savings account, which allows Apple Card holders to sign up for an account. Apple is not the first to offer high yield savings account, but it is among other tech giants such as Amazon and Google that have taken steps to encroach on banks’ turf.

When offering fintech through a partnership with a financial institution, businesses  are operating in a quasi-banking capacity without the same regulatory oversight as traditional banks offering similar financial products. This enables tech companies to enter the financial industry without the same restrictions as traditional banks.  This may benefit consumers, but it also makes it difficult for smaller traditional banks to compete in the same market with tech giants. Some may view this development as worrisome for traditional banks because there are very few companies that can go toe-to-toe with Apple.

Consumers increasingly seek online banking and payment services, digital wallets and easy access to funds without having to enter a bank location. Whether there will be a comprehensive policy that better integrates financial regulation and technology is unknown, but banks might consider including more technology friendly services to compete with the financial-technology industry.

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