- Apple may bundle multiple App Store purchases and subscriptions into a single transaction, which may not be charged to your account until several days later.
- Some consumers face budgeting challenges and high overdraft fees as they deal with the unpredictability of when charges will hit their accounts.
- “They don’t take into account that they will be billed later and that could cost them money.” [the money] In the meantime, they end up doing other things and end up being charged a higher fee,” said one expert.
Igor Golovniv SOPA Image | Light Rocket (via Getty Images)
For many purchases, when you swipe your debit or credit card or click “Buy Now,” the transaction immediately appears as pending in your account.However, this is not always the case when shopping. On Apple’s App Store.
Apple is known to do something called “bundled billing,” which groups purchases within a certain period of time into one bill.
The tech giant has been using this practice since the early days of the iTunes Music Store in 2003, where users can often buy apps, subscriptions, books, and music without the funds being charged to their accounts until days later. This means that you can purchase.
While it may seem like a small difference in timing, Apple’s practice of delaying and aggregating charges has left some consumers dealing with the unpredictability of when spending will hit their accounts. However, you may face budgeting challenges and high overdraft fees.
“It makes no sense,” said developer David Barnard. Growth advocate at RevenueCat, which creates tools to automate Apple billing on the developer side. Barnard also experienced delays on some of his App Store purchases.
“This is strange in this day and age when you buy something online and you get a receipt via email within seconds,” he said.
Longtime Apple user Savannah Moore, 35, of Buena Vista, Colorado, told CNBC that bundling became less of an issue when she worked full time and earned more money. but Now that she’s on disability, she only gets paid once a month, which makes it difficult to plan because she doesn’t know when she’ll be billed, she said.
Apple recently charged Moore a total of $15.98 for two separate transactions for a subscription and an in-app purchase, so he was billed three days after purchase for a subscription and two days for an in-app purchase. It was decided that
Because of late billing, she said her account balances were often misunderstood and she was repeatedly hit with overdraft fees.
“I go out with friends, buy cheap drinks, and eat tacos,” she said of her experience. “I woke up the next morning to find that my account had been disabled because the person who had purchased it that night had charged me for the tacos…but Apple never charged me the amount I was supposed to. ” [days earlier], until that night. ”
A spokesperson for Merchant Advisory Group, which works with more than 150 merchants across the United States, said it’s not unusual for companies to develop systems to minimize transaction costs imposed by card networks. Stated. For example, Starbucks has a rewards program that gives customers who pay with a Starbucks gift card two “stars” for every dollar spent, as opposed to one star if they pay with a credit or debit card. there is.
“It’s actually the same process, just a different way to make that process work.”
However, Apple’s approach is unique among major app stores.
Asked about this practice, an Apple spokesperson told CNBC in an emailed statement that the company sometimes combines multiple purchases or subscriptions into a single bill for the convenience of customers. said it sends a single email receipt for each purchase rather than separate emails. . The support section of our website also describes our practices regarding how to verify billed fees.
Apple did not respond to follow-up requests to clarify how it determines the period for late billing or when it decides on group purchases.
Google Play, on the other hand, doesn’t offer bundles, a company spokesperson told CNBC. The company’s website states that after customers purchase content, they will be charged “immediately” and receive a confirmation email with their order information.
An Amazon spokesperson said that purchases made on the Amazon Appstore are treated individually, and customers receive a “separate and clear” notification for each charge.
Some experts say there is likely to be economic benefit for Apple in consolidating and deferring fees.
Businesses must pay a per-transaction fee, or “swipe fee,” each time they process an electronic payment. Swipe fees are usually A percentage of the transaction amount plus a fixed commission. According to the Merchants Payment Coalition, credit card swipe fees average 2.24%, but can be as high as 4%.Federal Reserve caps debit card fees at 21 cents plus 0.05% of transactions.
By delaying billing so it can be grouped with other purchases, Apple You can maintain higher profit margins.
Late fees and bundling fees In the early days of the iTunes Music Store, it was more straightforward to charge customers every time they purchased a $0.99 song. In addition to the high interchange fees,, said developer Bernard. But in 2008, he said, with the advent of the App Store, this practice lost its meaning.
When we swipe our credit card or make a purchase, we feel happy. We like buying things, but we don’t like seeing deals.
michael barbera
Chief Behavioral Officer at Clicksuasion Labs
Lawrence Sprung, a certified financial planner and founder of Mitlin Financial in Hauppauge, New York, said bundling can offer cost-saving benefits for clients.
By grouping purchases together, Apple can save on transaction fees, so customers will likely pay less for their purchases, he said.
“If companies can keep their costs down, the hope is that they’ll keep costs down for consumers,” Sprung said.
Psychology experts say that if customers aren’t charged immediately after making a purchase, they may be encouraged to make more purchases.
Consumer psychologist Michael Barbera, chief behavior officer at Clicksuasion Labs, says bulk billing can reduce the “pain of payment,” which refers to the negative emotions people experience when paying for goods and services. says. If your customers receive a receipt or notification every time they make a purchase, they’re less likely to spend money in the future.
“Swiping a credit card or making a purchase makes us happy,” Barbera says. “We like buying things, but we don’t like seeing transactions.”
So when customers can fully enjoy an app or service without being charged on the spot, they’re more likely to associate their interactions with Apple as experiential rather than transactional, which drives consumer behavior. said Barbera.
Abigail Leff, a San Francisco-based clinical psychologist and consultant, says lump-sum billing practices and a lack of clarity on how to implement policies create the illusion that customers are spending less frequently. Stated.
This can lead to overspending, especially for people who aren’t good at managing their expenses.
At some point, we have to say, “Hey, I’m an adult.” You know you’re spending this money, so you need to track it. ”
Taylor Kovar, CFP
CEO and Founder of Kobar Wealth Management
Piyush Tantia, a behavioral scientist and chief innovation officer at Ideas42, said the economic impact of bulk billing could disproportionately impact people living paycheck to paycheck. Stated. These people tend to have unstable incomes and expenses, which makes it difficult to closely track their finances.
“They don’t take into account that they will be billed later and that could cost them money.” [the money] “During that time, you end up doing other things and end up being charged a higher fee. For someone who is already financially strapped, that additional fee is very painful,” Tantia said.
Artist photo | E+ | Getty Images
Consolidated charges can be even more problematic for shoppers who use debit cards, as Apple user Moore discovered. Since the Consumer Financial Protection Bureau began scrutinizing bank fees, some banks have eliminated overdrafts or introduced more consumer-friendly policies. Still, the average overdraft fee is $26.61 and can be as high as $38. According to recent data from Bankrate.
Taylor Kovar, a certified financial planner and CEO and founder of Kovar Wealth Management in Lufkin, Texas, said Apple’s billing delays are impacting some customers. As with many recurring bills such as utilities or student loans, ideally the customer would know when they will be charged, but it is still important that the customer takes responsibility for their purchases. He said that there is.
“At some point, we’re like, ‘Hey, I’m an adult. I know I’m spending this money, I need to keep track of it,'” Kovar said. he said.
Kovar said advances in technology mean consumers should take advantage of free budgeting apps that allow them to set alerts and track where their money is going. He also said that charging Apple App Store purchases to a credit card rather than a debit card is safer because it protects against fraud and overdraft fees.
Michael Liersch, a behavioral scientist and director of advice and planning at Wells Fargo Wealth and Investment Management, says he checks his bank account immediately after purchasing something to see if it’s been charged. He said that it is not common to confirm. People tend to record money coming and going in a “mental account” and check it from time to time.
Because of this, the impact of delayed claims on people may vary depending on how often people interact with money, he said.
“Given typical consumer behavior, it’s not unusual for people to see that information maybe once a month,” Liersch said. “It’s much more unusual for someone to see that every once in a while or even every day.”
Rirsch said it’s important to focus on how much money you can spend on a daily, weekly and monthly basis to ensure you can manage your finances even if your bills are delayed.