Apple is shutting down its buy now, pay later service, Apple Pay Later, just a little over a year after it was first introduced in the United States. Instead, Apple will partner with companies like Affirm and Klarna, which are already well-established in the buy now, pay later industry.
This decision shows that even a company as successful as Apple, known for creating popular products, can find it challenging and competitive to build a financial services business from the ground up. Apple has been working on this for several years.
When Apple Pay Later launched in March 2023, it was seen as a big deal. It allowed iPhone users to split purchases of up to $1,000 into four equal payments without any fees or interest. The service was Apple’s response to the growing popularity of buy now, pay later services around the world and was considered a major threat to companies like Klarna and Affirm.
However, Apple Pay Later had one drawback: it was only available where Apple Pay was accepted. In contrast, other buy now, pay later companies had already integrated their services into millions of merchant websites.
Recognizing how popular buy now, pay later services had become, Apple recently announced at its developer’s conference that it would allow banks to offer these payment plans to their customers through Apple Pay and Apple Wallet. Affirm will be directly integrated into Apple Wallet, and Apple customers will be able to open an Affirm account directly.
Apple said, “With the introduction of this new global installment loan offering, we will no longer offer Apple Pay Later in the U.S. Our focus continues to be on providing our users with access to easy, secure and private payment options with Apple Pay, and this 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.”
Even though Apple executives had recently indicated that they still had plans for Apple Pay Later, the company has now stopped offering new Apple Pay Later loans. However, customers who already have Apple Pay Later loans will still be able to manage them within Apple Pay.
Apple Pay Later was unique because Apple had to create its own bank to offer the loans.
The Apple Card is issued by Goldman Sachs, which means Goldman ultimately decides who gets approved and what spending limits are for each customer.
The Associated Press contributed to this article.