Why Did Apple Pay Later Bite the Dust? The Inside Story

Apple Pay Later, the tech giant’s foray into the Buy Now, Pay Later (BNPL) space, shuttered its digital doors surprisingly quickly. The straightforward answer? Apple Pay Later was discontinued to make way for a new, more robust installment loan offering through Affirm and other third-party lenders directly integrated within Apple Pay. In essence, Apple realized it could provide a better, more scalable, and more comprehensive service by leveraging the expertise and existing infrastructure of established BNPL providers instead of building and maintaining its own from scratch.

The Short Life and Abrupt End of Apple Pay Later

Apple Pay Later, launched in March 2023, aimed to give users in the United States a convenient way to split purchases into four interest-free payments over six weeks. It was integrated directly into the Apple Wallet, making it easily accessible to millions of iPhone users. So, what went wrong? Or perhaps more accurately, what didn’t quite go right enough to justify its continued existence?

While Apple Pay Later was functional, it was also relatively limited. Its credit limits were typically lower than those offered by competitors, and it lacked features like long-term financing options. Apple, renowned for its user experience and seamless integration, likely found that scaling and improving the product to meet market demands required more resources and presented more challenges than initially anticipated.

Furthermore, the regulatory landscape surrounding BNPL services is becoming increasingly complex. Instead of navigating these complexities alone, Apple chose to partner with existing financial institutions already adept at compliance and risk management in the lending space.

The shift to a system relying on Affirm and other lenders within Apple Pay also offers several advantages from Apple’s perspective. It allows them to:

• Offload credit risk: Apple is not directly underwriting or managing the loans, reducing its exposure to potential defaults.
• Expand service offerings: Partner lenders can provide a wider range of loan terms, credit limits, and interest rates, catering to a broader spectrum of users.
• Focus on core competencies: Apple can concentrate on what it does best – designing innovative software and hardware – while leaving the financial heavy lifting to specialized companies.

In short, Apple Pay Later was a valuable learning experience for Apple, allowing them to assess the BNPL market and understand user needs. However, the company ultimately decided that a partnership-based approach would deliver a superior experience for both consumers and Apple itself.

What’s Next for Apple Pay and BNPL?

The future of BNPL within the Apple ecosystem is bright, albeit different. By integrating established providers directly into Apple Pay, Apple ensures that users can access a wider array of financing options, competitive interest rates (where applicable), and higher credit limits. This approach offers a more flexible and user-friendly experience, aligning with Apple’s commitment to providing seamless and convenient payment solutions.

Users can expect a smoother application process and a more transparent experience. Furthermore, Apple’s secure payment infrastructure ensures that all transactions are protected, providing peace of mind to consumers.

Ultimately, the demise of Apple Pay Later wasn’t a failure, but rather an evolution. It’s a strategic pivot towards a more sustainable and scalable approach to offering BNPL services to Apple users.

Frequently Asked Questions (FAQs) About Apple Pay Later

Here are some frequently asked questions that users are asking regarding Apple Pay Later:

1. When Did Apple Pay Later Officially Stop?

Apple officially discontinued Apple Pay Later on June 17, 2024.

2. What Happens to My Existing Apple Pay Later Loans?

If you already have an outstanding Apple Pay Later loan, nothing changes. You will continue to make payments as scheduled until the loan is fully repaid. The loan will still be visible in your Apple Wallet, and you can manage your payments as before.

3. Can I Still Apply for Apple Pay Later Before My Existing Loan Is Paid Off?

No, you cannot apply for new Apple Pay Later loans after June 17, 2024. The service is no longer available for new applications.

4. How Do I Access BNPL Options in Apple Pay Now?

When making a purchase through Apple Pay, you will see available installment loan options from participating lenders like Affirm displayed during the checkout process. You can choose the option that best suits your needs and apply directly through Apple Pay.

5. Will I Still Get 0% Interest on BNPL Purchases Through Apple Pay?

The interest rates and terms of BNPL loans will depend on the lender and your creditworthiness. Some lenders may offer 0% interest options, while others may charge interest. Be sure to review the terms and conditions carefully before accepting a loan.

6. What Lenders Are Currently Integrated With Apple Pay for BNPL?

As of the latest information, Affirm is a confirmed partner lender, and Apple has indicated that they are working to add more lenders to the platform. The specific lenders available may vary depending on your location and credit profile.

7. Will Using BNPL Through Apple Pay Affect My Credit Score?

Applying for and using BNPL loans can affect your credit score. A hard credit inquiry might be performed when you apply for a loan, and your payment history will be reported to credit bureaus. Late or missed payments can negatively impact your credit score, while responsible use of BNPL can potentially help build your credit.

8. What Are the Advantages of Using BNPL Through Apple Pay Instead of Apple Pay Later?

The advantages include:

• Wider range of loan terms and credit limits
• Potential for lower interest rates (depending on the lender and your credit)
• More lender options to choose from
• Offloading credit risk from Apple’s balance sheet

9. How Does Apple Benefit From Partnering With BNPL Lenders?

Apple benefits by:

• Reducing its financial risk associated with lending
• Expanding its BNPL offerings without investing heavily in infrastructure
• Focusing on its core competencies of software and hardware development
• Providing a more comprehensive and scalable service to its users

10. Is Apple Planning to Re-Introduce Apple Pay Later in the Future?

While Apple has not ruled out re-entering the BNPL market with its own branded product in the future, there are no current plans to revive Apple Pay Later. The focus remains on integrating and improving the partner-based BNPL experience within Apple Pay.

11. How Do I Manage My BNPL Loans Accessed Through Apple Pay?

You will typically manage your BNPL loans directly through the lender’s app or website. Apple Pay will provide a link to the lender’s platform where you can view your loan details, make payments, and manage your account.

12. What If I Have Questions or Issues With a BNPL Loan Accessed Through Apple Pay?

You should contact the lender directly for any questions or issues related to your BNPL loan. Apple provides the platform for accessing the loans but is not responsible for the loan terms, repayments, or customer service.