Apple’s decision to discontinue its buy now, pay later service has caused a stir among consumers, but the tech giant is not abandoning the product entirely. Apple plans to launch a successor to its BNPL service later this year through third-party providers like Affirm. The move comes as BNPL loans have gained immense popularity, with $75 billion in online spending in 2023 driven by these loans, according to Adobe Analytics. The new solution from Apple aims to bring flexible payments to more users globally in collaboration with Apple Pay-enabled banks and lenders.
While existing users of Apple’s BNPL service, Apple Pay Later, can still manage and pay open loans via the Wallet app, the company is shifting gears towards a new installment loan offering. Apple Pay users will soon be able to apply for BNPL loans directly through Affirm and access installment options from credit and debit cards. The original Apple BNPL product was seen as a competitor to Affirm, offering customers the option to pay in four interest-free installments for items up to $1,000. In contrast, Affirm provides users with the flexibility of paying in two or four installments, along with monthly installments for higher-cost items.
Apple’s decision to partner with Affirm for its new BNPL offerings reflects the tech giant’s strategy to retain customer relationships while expanding its payment solutions portfolio. By delivering the BNPL products via Apple Pay, Apple ensures minimal risk and full ownership of the customer experience. Analysts believe that this move is similar to what has been seen with debit cards, where regardless of the funding source, Apple’s technology drives the payment experience. While Apple may consider partnering with other BNPL providers like Klarna in the future, Affirm’s technology, underwriting expertise, and customer-friendly policies make it an attractive choice for the tech giant.
Despite the potential for Apple to collaborate with other BNPL providers, such as Klarna, Affirm’s technology, and customer-friendly approach have positioned it as a preferred partner for Apple. Affirm’s decision to not charge users late fees and its strong underwriting capabilities make it a suitable choice for Apple as it expands its BNPL offerings. Shares in Affirm experienced a slight decline in response to weaker-than-expected retail sales data in May. However, the collaboration with Apple on new BNPL products presents a significant opportunity for Affirm to further establish itself in the market and attract more customers to its platform.
