Apple has announced that it will discontinue its independent ‘Buy Now, Pay Later’ (BNPL) service, Apple Pay Later, which launched last year. According to a new report, Apple will introduce a successor through third-party partnerships, beginning with Affirm.
The report disclosed that the COVID-19 pandemic spurred a surge in online shopping, significantly boosting the popularity of BNPL services. According to Adobe Analytics, BNPL loans drove $75 billion (S$101 billion) in online spending in 2023, a 14.3 percent increase from 2022.
In a statement released, Apple emphasised that its new BNPL 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 company did not elaborate on why it ended its independent BNPL offering.
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Apple confirmed that current users of Apple Pay Later will still be able to manage and pay off their existing loans via the Wallet app.
The company also revealed that Apple Pay users would have access to new instalment loan options, including applying for BNPL loans directly through Affirm when checking out with Apple Pay. Additionally, customers will be able to make instalment payments using their credit and debit cards.
The report revealed that Apple’s original BNPL product was seen as a direct competitor to established providers like Affirm. It allowed customers to purchase items and pay in four interest-free instalments for products priced up to $1,000. Affirm offers users the flexibility to pay in two or four instalments and monthly plans for higher-cost items.
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Sean Gelles, director of payments intelligence at J.D. Power, commented on Apple’s strategic shift: “To me, this sounds a lot like what we see happening with debit cards. Regardless of which debit card a consumer has used to fund their purchases, as long as they use Apple Pay, it’s Apple that owns the experience.”
Gelles added that delivering the new portfolio of BNPL products via Apple Pay poses minimal risk for Apple, as it retains the customer relationship. He also suggested that Apple partner with additional BNPL providers, such as Affirm’s competitor Klarna.
