Apple has decided to discontinue its buy now, pay later service known as Apple Pay Later, less than a year after its launch, in preparation for upcoming changes to its Apple Pay platform.
Discontinuation of Apple Pay Later
As of Monday, Apple Pay Later has been shut down in the U.S., according to a statement from Apple to 9to5mac. This decision comes ahead of Apple’s planned launch of new Apple Pay features this fall, which will include the ability for users to make purchases and access installment loans through Affirm.
“With the introduction of this new global installment loan offering, we will no longer offer Apple Pay Later in the U.S.,” Apple said. The company emphasized that its focus remains on providing users with easy, secure, and private payment options through Apple Pay and that the new solution will enable more flexible payments in collaboration with Apple Pay-enabled banks and lenders.
Apple Pay users who currently have active Apple Pay Later loans can continue to manage them through the Apple Wallet app, as confirmed by Apple. The company did not immediately respond to further inquiries regarding the discontinuation.
Rise and Regulation of Buy Now, Pay Later Services
The buy now, pay later (BNPL) model has surged in popularity, with more than 40% of Americans having used such services, according to a Lending Tree survey. These loans are designed to encourage consumers to make purchases by allowing them to pay in installments, though users may incur fees if payments are missed, potentially leading to accumulated debt.
In 2021, BNPL loans reached $24 billion, a significant increase from $2 billion in 2019, as reported by the CFPB. Despite their popularity, many consumers struggle with managing the payment obligations associated with BNPL services.
Financial regulators have been closely monitoring the BNPL industry since 2021 and have implemented rules aimed at protecting consumers. For instance, in May, the CFPB issued a rule requiring BNPL lenders to provide consumers with the same protections as conventional credit cards. These include the right to dispute charges and obtain a refund from the lender after returning a purchased item.
Impact and Future of Payment Options
The discontinuation of Apple Pay Later marks a shift in Apple’s strategy towards integrating new installment loan features into Apple Pay, which is expected to roll out in the coming months. This move aligns with the broader trend of financial technology companies expanding their offerings to meet consumer demand for flexible payment solutions.
Looking ahead, the evolution of BNPL services will likely continue to be influenced by regulatory developments and consumer preferences. As the industry matures, ensuring consumer protection and financial transparency will remain key priorities for both regulators and service providers.