International Finance

Apple kills its ‘Pay Later’ service, turns to third parties for BNPL products

Apple stated that its new system will allow us to work with banks and lenders that support Apple Pay to bring flexible payments to more users, in more places across the globe

Amid reports about Apple ending its buy now, pay later service (introduced in 2023), Apple has decided to rechristen the product in a new form. And the latest developments suggest that a BNPL successor will be made available later in 2024 through third parties like Affirm.

As more people were forced to shop online due to the COVID-19 pandemic, buy now, pay later (BNPL) became extremely popular, and customers have continued to find value in the product. According to Adobe Analytics, BNPL loans accounted for USD 75 billion in online spending in 2023, an increase of 14.3% from 2022.

Apple stated that its new system “will allow us to work with banks and lenders that support Apple Pay to bring flexible payments to more users, in more places across the globe.”

The company stopped talking about why it was discontinuing its independent BNPL offering. The Wallet app will continue to allow current BNPL customers to manage and pay for open loans, according to the company.

The Apple Pay Later service is used to allow its users to take out loans and split purchases into four instalments without paying interest or fees. As the product is witnessing a reboot, the company has confirmed that the existing users with “Pay Later Loans” will be able to track them within the Wallet app, but no new loans will be issued.

Apple Pay users will have access to new instalment loan options this fall, including the option to apply for BNPL loans directly through Affirm when they check out with Apple Pay, the company announced. The tech giant also announced that customers would also be able to access instalments from credit and debit cards.

Analysts had considered Affirm and other BNPL providers to be competitors of Apple’s initial BNPL product. It gave clients the option to purchase goods up to USD 1,000 and pay for them in four interest-free payments.

Customers can choose between paying for goods in two or four instalments with Affirm, or they can choose to pay for more expensive items in monthly instalments.

“To me, this sounds a lot like what we see happening with debit cards. Regardless of which debit card a consumer has funded their purchases, as long as they use Apple Pay, it’s Apple that owns the experience,” Sean Gelles, director of payments intelligence at JD Power, said.

Gelles went on to say that there would be “minimal risk for Apple as they will thereby retain the relationship with the customer” if Apple Pay was used to deliver its new line of BNPL products.

All You Need to Know About Pay Later Service

Apple first announced the launch of this new service with the iOS 16 update in 2022, and the tech giant began rolling out the feature via ‘early access’ in March 2023. However, the feature was not officially launched and made part of the Wallet app until October 2023.

Launched in partnership with Mastercard and Goldman Sachs, the Pay Later service was the first occasion of Apple offering short-term loans on its own. With the service coming to an end in 2024, Apple will switch to a built-in instalment loan feature, which will be added with the iOS 18 update.

As announced by the venture in the recently concluded WWDC 2024, the instalment loan feature would first be rolled out to the United Kingdom users, with support for HSBC and Monzo banks.

Apple told the media, “Starting later this year (2024), users across the globe will be able to access instalment loans offered through credit and debit cards, as well as lenders, when checking out with Apple Pay. With the introduction of this new global instalment loan offering, we will no longer offer Apple Pay Later in the US.”

“Our focus continues to be on providing our users with access to easy, secure and private payment options with Apple Pay, and this solution will enable us to bring flexible payments to more users, in more places across the globe, in collaboration with Apple Pay enabled banks and lenders.” the tech giant concluded.

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