Thursday, June 20, 2024
Apple announced the changes in a statement to 9to5Mac, a news site dedicated to all things Apple.
Apple Pay Later was launched with much fan fare in June 2022 as an option in the Apple Wallet, but it only became available in March 2023. The scheme was backed by a subsidiary, Apple Financing, set up expressly for BNPL. It allowed consumers to apply at the POS to pay off purchases of up to $1,000 in four equal installments over six weeks, interest free.
Apple said it is replacing Apple Pay Later with installment payment options through partnerships in the United States with Citibank, Discover, Synchrony, Fiserv and BNPL lender Affirm to offer installment payment options with the release of its iOS18 operating system, expected this fall.
There will be partnerships with other lenders in different markets around the globe.
"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," the company said in a statement.
In an online statement heralding new upcoming features of iOS18, Apple said the change is expected to offer "even more flexibility and choice for users when they check out online and in-app."
BNPL options have been around for several years, dominated by three major providers: Affirm, Klarna and PayPal. But usage began to spike during the COVID pandemic. Still, at roughly 9.3 percent of consumers using BNPL, according to the Federal Reserve Bank of Boston, usage remains relatively low. Three years ago just 6.6 percent of consumers reported using BNPL.
The Fed's research suggests that BNPL usage is high among consumers who lack alternative sources of credit, don't have credit cards or who have low credit limits. On average, a BNPL customer has $2,179 in their checking account, whereas other consumers have on average $6,638 in their checking accounts, the Fed reported.
BNPL users are also more likely to carry high credit card balances. Nearly a quarter (23.4 percent) of consumers who had declared bankruptcy at some point during the previous year used BNPL in the month leading up to the Fed's survey, which was taken in October 2023.
All of this has not been lost on the Consumer Financial Protection Bureau, which has been investigating the BNPL market in recent years. Last month the consumer watchdog agency made clear that BNPL customers have the same protections as credit card users, as spelled out in the Truth-in-Lending Act.
Importantly, these protections include refunds and the right to dispute transactions. Explaining its rationale, the CFPB said its research found 13 percent of BNPL transactions involve a return or dispute.
"Regardless of whether a shopper swipes a credit card or uses Buy Now, Pay Later, they are entitled to important consumer protections under longstanding laws and regulations already on the books," CFPB Director Rohit Chopra said in a statement. 
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