In a surprise turn of events, tech giant Apple is set to pull the plug on its fledgling ‘buy now, pay later’ service, Apple Pay Later, a year after its inauguration in the U.S. Instead, the Cupertino major plans to lean on industry mainstays, the likes of Affirm and Klarna.
This decision is seen as a significant concession from a company that prides itself on launching successful products. It acknowledges the complexities and fierce competition in the creation of a burgeoning financial services business, an arena in which Apple has been trying to gain a foothold for several years.
Apple Pay Later, unveiled amid much ado in March 2023, was designed as an answer to rising worldwide interest in ‘buy now, pay later’ services. Specifically, it allowed iPhone customers to split purchases of up to $1,000 into four equal payments, devoid of fees or interest. The service was seen as a significant challenge to established players such as Affirm, Klarna, and others.
However, the service came with its limitations, available only where Aplle Pay was accepted. Other ‘buy now, pay later’ companies had managed to seamlessly weave their services into millions of merchant websites, giving them a competitive edge.
In an understanding nod to the popularity surge of such payment plans, Apple announced in its developer’s conference this month that it would enable banks to offer ‘buy now, pay later’ schemes to their customers via Apple Pay and Apple Wallet. As part of this shift, Affirm’s services will be integrated directly into Apple Wallet, allowing Apple customers to readily open an Affirm account.
Highlighting this pivot, Apple announced, “With the introduction of this new global installment loan offering, we will no longer offer Apple Pay Later in the U.S.” The company asserts that its primary focus will be to continue providing users with convenient, secure, and private payment options via Apple Pay and claims that this move will allow them to offer more flexible payments to a larger user base around the world.
Even though Apple executives had suggested plans for the continued existence of Apple Pay Later as recently as this month, the integration of Affirm directly into Apple Wallet signaled a shift in their strategy.
Apple Pay Later was distinct in that it required Apple to establish its own banking system to handle the loans. The Apple Card is issued by Goldman Sachs, implying that Goldman ultimately sanctions approvals and determines spending limits for each customer.
While Apple has curtailed any future loans under Apple Pay Later, it assures customers with existing loans under the service that they will continue to be able to manage them through Apple Pay.
