Apple has announced a shift in its buy now, pay later (BNPL) strategy, discontinuing its independent BNPL service launched last year. Instead, the tech giant will introduce a new installment payment solution later this year through partnerships with third-party providers like Affirm.
The popularity of BNPL services surged during the COVID-19 pandemic as more consumers turned to online shopping. In 2023, BNPL loans accounted for $75 billion in online spending, marking a 14.3% increase from the previous year, according to Adobe Analytics.
Apple's new BNPL solution aims to expand flexible payment options globally through collaborations with banks and lenders that support Apple Pay. While the company did not provide specific reasons for discontinuing its independent BNPL offering, it emphasized that current users of Apple Pay Later can still manage and repay their existing loans through the Wallet app.
Starting this fall, Apple Pay users will have access to new installment loan options, including the ability to apply for BNPL loans directly through Affirm at checkout. Additionally, customers will be able to choose installment plans using their credit and debit cards.
Apple's initial BNPL service allowed customers to split payments into four interest-free installments for purchases up to $1,000, positioning it as a competitor to established BNPL providers like Affirm. Affirm offers various payment plans, including two or four installments and monthly payments for higher-priced items.
While Apple may consider partnerships with other BNPL providers in the future, sources indicate that Affirm's robust technology and underwriting capabilities played a significant role in Apple's decision. Affirm's policy of not charging late fees also aligns with Apple's user-friendly approach.
Shares of Affirm recently dipped by 0.7%, which one analyst attributed to weaker-than-expected retail sales data for May.
As Apple continues to innovate in the financial services space, this new partnership with Affirm reflects its commitment to providing flexible and accessible payment solutions for its global customer base.
