Apple Turns to Third Parties for ‘Buy Now, Pay Later’ After Ending Product

Apple is abandoning its buy now, pay later program launched last year, but a successor will emerge later this year via third-parties like Affirm

As the COVID-19 pandemic compelled more consumers to shop online, the prevalence of buy now, pay later (BNPL) surged, and the product has remained popular with consumers.

According to Adobe Analytics, BNPL loans accounted for $75 billion in online expenditures in 2023, a 14.3% increase from 2022.

Apple announced on Monday that its latest solution will “allow us to expand the availability of flexible payments to a broader range of users in a greater number of locations worldwide, in partnership with Apple Pay-enabled banks and lenders.”

It declined to provide additional information regarding the rationale behind its decision to discontinue its independent BNPL offering.

The company stated that existing users of the BNPL service, Apple Pay Later, will continue to be able to administer and pay open loans through the Wallet app.

Apple announced last week that Apple Pay users could access new installment loan offerings this autumn. This includes the ability to apply for BNPL loans directly through Affirm when they check out with Apple Pay.

The tech titan also announced that customers can access installments from their credit and debit cards.

Analysts had perceived Apple’s initial BNPL product as a competitor to BNPL providers such as Affirm. It permitted customers to acquire products and pay for them in four interest-free installments for items valued at up to $1,000.

Users can pay for products in two or four installments and monthly installments for higher-cost items through Affirm.

Sean Gelles, director of payments intelligence at J.D. Power, stated, “To me, this sounds a lot like the behavior we observe 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.”

Gelles further stated that Apple would incur “minimal risk” by utilizing Apple Pay to deliver its new portfolio of BNPL products, as it would preserve its customer relationship.

Although Apple may opt to collaborate with additional BNPL providers in the future, including Klarna, a competitor of Affirm, a source familiar with the matter emphasized Affirm’s technology and underwriting expertise and the company’s decision to refrain from charging users late fees.

Affirm’s shares experienced a 0.7% decline, which one analyst attributed to the weaker-than-anticipated retail sales data in May.