Apple is set to discontinue its buy now, pay later (BNPL) service launched last year. However, it will introduce a successor later this year via third parties like Affirm. The original BNPL service gained immense popularity during the COVID-19 pandemic as online shopping surged. BNPL loans fueled $75 billion in online spending in 2023, a 14.3% increase from 2022, according to Adobe Analytics.
In a statement on Monday, the company announced that its new 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.” However, they did not comment further on why it was ending its independent BNPL offering. Existing users of Apple Pay Later can still manage and pay open loans via the Wallet app.
Apple also revealed that starting this fall, Apple Pay users will have access to new instalment loan offerings. This includes the ability to apply for BNPL loans directly through Affirm at checkout. Additionally, customers will be able to access instalments from credit and debit cards.
Analysts had viewed Apple’s original BNPL product as a competitor to providers like Affirm. It allowed customers to buy products and pay in four interest-free instalments for items up to $1,000. Affirm offers similar options, including two or four instalments and monthly payments for higher-cost items.
Sean Gelles, director of payments intelligence at J.D. Power, said, “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.” He added that if they deliver their new BNPL products via Apple Pay, there would be minimal risk for them as they retain the customer relationship.
While Apple may partner with additional BNPL providers in the future, a source highlighted Affirm’s technology and underwriting expertise, as well as its choice to not charge users late fees. Klarna, a rival BNPL provider, declined to comment. Shares in Affirm were last down 0.7% on the day, attributed to weaker-than-expected retail sales data in May.
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