Apple Pay Later is getting killed in favor of third-party loan integration

AppleInsider

Apple has announced that it will be ending its Apple Pay Later program, roughly one year after it launched it.

Apple Pay Later

Initially launched

in October 2023, Apple Pay Later was Apple's stab at offering Apple users a short-term financing solution that spread payments over six weeks.

Now, despite its success, it seems that the tech giant is killing off the program in favor of new features being launched later this year.

Apple provided a statement to 9to5Mac that said the company would instead be working with existing short-term loan programs, such as Affirm, to integrate those into Apple Pay.

Apple likely decided it didn't want to be in the short-term loan game, for reasons known only to itself right now. While Goldman Sachs issued the Mastercard payment credential, Apple Pay Later loans were actually backed by the tech giant itself.

Users with active Apple Pay Later plans can still manage and pay their loans through the Wallet app. Installment purchase plans for Apple hardware are unrelated, and are unaffected by the closure at this time.

Gains or losses from Apple Card and Apple Pay Later are embedded in Apple's Services revenue reporting. It's never been clear how many Apple Pay Later loans were issued.

In early June, Apple had announced that it would roll out new Apple Pay features in the fall. The announcement even telegraphed that Apple may be preparing to exit the short-term loan space.

The company said Apple Pay would offer greater flexibility and choice for checking out online and in-app. It would allow users to redeem rewards and access installment loan offerings from eligible credit or debit cards when purchasing online or in-app with iPhone and iPad.

The announcement also pointed out that Apple Pay users can apply for pay-later loans directly through Affirm when checking out with Apple Pay.



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Jamal_Jamal

"Now, despite its success, it seems that the tech giant is killing off the program in favor of new features being launched later this year. "  I guess defining 'success' is the key here.

If one would simply say there were one million people who used the program (without stating how many fulfilled their obligation) it might seem to be a success. However, if of the one million only 100,000 completed their obligation that would not be a success, and that may be why Apple stopped the program.

DAalseth

I’m going to go a different direction. I’m wondering if Apple pulled back because it didn’t want to be accused of trying to push into Banking. They already are getting grief over being too powerful and moving from computers into phones, then music, then media and streaming… Perhaps they didn’t want to open another front for people to accuse them of bad behaviour. It’s not like this side of things is bringing them much money. 

MplsP

DAalseth said:

I’m going to go a different direction. I’m wondering if Apple pulled back because it didn’t want to be accused of trying to push into Banking. They already are getting grief over being too powerful and moving from computers into phones, then music, then media and streaming… Perhaps they didn’t want to open another front for people to accuse them of bad behaviour. It’s not like this side of things is bringing them much money. 

Agreed. Also, from what I've read in other articles, Apple Card users tend to be higher than average income and tend to pay off their balances more. That demographic tends to take advantage of 'buy now, pay later' offers less frequently and also tends to be better at avoiding finance charges meaning the program likely earns less money.

Stabitha_Christie

I completely forgot this existed. 

danox

The EU/DOJ is waiting and they will let us know when next %er in their region needs help.

muthuk_vanalingam

MplsP said:

DAalseth said:

I’m going to go a different direction. I’m wondering if Apple pulled back because it didn’t want to be accused of trying to push into Banking. They already are getting grief over being too powerful and moving from computers into phones, then music, then media and streaming… Perhaps they didn’t want to open another front for people to accuse them of bad behaviour. It’s not like this side of things is bringing them much money. 

Agreed. Also, from what I've read in other articles, Apple Card users tend to be higher than average income and tend to pay off their balances more. That demographic tends to take advantage of 'buy now, pay later' offers less frequently and also tends to be better at avoiding finance charges meaning the program likely earns less money.

If I remember correctly, @GatorGuy posted a link to show the data that is exactly opposite of what your assuming.

nubus

danox said:

The EU/DOJ is waiting and they will let us know when next %er in their region needs help.

Yup - for Apple to use their position on iPhone to compete against European pay-later solutions like Klarna won't have a happy end. And why enter financing? Banks have terrible P/E ratios on their stocks and their brand images are even worse.

Apple should work on health instead of making it easy to spend without a line of credit.

tundraboy

It was an awful idea in the first place for Apple to get into the usury business.  The optics alone of being a financial predator would be bad.

Xed

tundraboy said:

It was an awful idea in the first place for Apple to get into the usury business.  The optics alone of being a financial predator would be bad.

It's 0% interest, so not exactly what I'd call predatory. Now, if they replace with Apple Paycheck Cashing Services I'll agree.

StrangeDays

nubus said:

danox said:

The EU/DOJ is waiting and they will let us know when next %er in their region needs help.

Yup - for Apple to use their position on iPhone to compete against European pay-later solutions like Klarna won't have a happy end. And why enter financing? Banks have terrible P/E ratios on their stocks and their brand images are even worse.

Apple should work on health instead of making it easy to spend without a line of credit.

By that same logic what right does Mitsubishi have selling cars and air conditioners? Or any of the million markets Samsung operates in, etc. Where the focus lies is a business decision, but I don't see it as an unfair abuse of monopoly in one area for influence in another, since, you know, iPhone doesn't any an monopoly market shares. 

entropys

One, it is probably as apple is changing its card partner from Goldman Sachs. No doubt whoever it is has a product already in place.
two, perhaps Apple wants to offer this product in other countries than the USA. The old model could not get agreement for the provincial behaving banking sector elsewhere.  

gatorguy

Apple exiting the BuyNowPayLater financing can avoid upcoming requirements the US Consumer Financial Protection Bureau intends to impose on that type of lender. Essentially, BuyNow and PayLater will fall under the same general rules as a credit card. That would mean Apple won't have to investigate customer disputes, process refunds, issue account credits, or provide other types of financial protection that typical lenders are required to provide. You know, all the not fun stuff.