Apple is scrapping its highly anticipated buy now, pay later (BNPL) service as key jurisdictions move towards regulating BNPL in the same way as other credit products.
Less than a year since the full launch of the service, Apple has confirmed that Apple Pay Later will be discontinued. With immediate effect, customers will no longer be able to take out new loans using Apple Pay Later, the big tech firm said on Monday (June 17).
Existing Apple Pay Later loans and purchases are unaffected, however, and users can continue to manage their repayments within the Apple Wallet app.
Apple did not explain its reason for this new preference, and did not respond to Vixio’s request for comment, but earlier told another publication that scrapping Apple Pay Later will lead to more BNPL partnerships with Apple Pay-enabled banks and lenders.
An industry insider Vixio spoke with said that the decision was likely based on a number of factors, including future regulatory demands.
In March 2023, Apple Pay Later launched exclusively in the US on an invitation-only basis, followed by a full launch in the US in October 2023.
The service allowed users to split purchases into four instalments spread over six weeks, with no interest charges and no late fees.
In May 2024, the US Consumer Financial Protection Bureau (CFPB) joined lawmakers in Australia and the UK in signalling the end of BNPL as an unregulated credit product.
As covered by Vixio, the CFPB issued a new interpretative rule confirming that BNPL lenders meet the criteria for being “credit card issuers” under the Truth in Lending Act (TILA) 1968.
Apple Pay Later loans were funded by Apple Financing LLC, a wholly owned subsidiary of Apple Inc., putting the BNPL service squarely within the crosshairs of the CFPB.
Apple Pay opens up to third-party BNPL providers
During Apple’s Worldwide Developers Conference (WWDC) last week, the Silicon Valley firm announced that Apple Pay will soon open up to third-party BNPL providers.
Beginning in Australia, Apple will partner with ANZ, allowing cardholders to enter Instalment Plans when checking out online or in-app using Apple Pay.
Similar functionality will be rolled out in the UK through partnerships with HSBC and Monzo; in Spain through a partnership with CaixaBank; and in the US through partnerships with Citi, Synchrony and issuers with Fiserv.
Exclusively in the US, Apple Pay users will also be able to enter instalment plans provided by Affirm when checking out using Apple Pay.
At the time of announcement, the opening up of Apple Pay to Affirm appeared to make little sense, given that Apple Pay Later was offering a near-identical product.
One week later, with Apple Pay Later quietly being wound down, the WWDC announcements start to make more sense.
With regulations looming, Apple will pivot to a platform model whereby Apple Pay simply acts as a “pass-through” for third-party BNPL transactions.
This spares Apple the compliance burden of operating its own BNPL service, but still allows it to service, and to profit from, users who want to keep spending via BNPL.
Apple’s BNPL offering in the US now mirrors its existing position in Australia. In August last year, Apple said it had no plans to launch Apple Pay Later in Australia due to the “challenging regulatory structure” that was likely to emerge in the country.
Earlier this month, Australia's Labor government introduced a new bill to parliament that seeks to regulate BNPL as a credit product. If adopted, BNPL providers will be required to hold and maintain an Australian credit licence, among other obligations.