NEW YORK — Apple is ending Apple Pay Later, its buy-now-pay-later service, just a year after it launched in the U.S. Instead, it will work with Affirm and Klarna, two companies that already dominate the market.
Apple has been building a financial services business from scratch for several years. This is an admission from a company AAPL, -0.86% known for making hit products that it is hard and very competitive.
With Apple Pay Later, iPhone buyers could pay for purchases up to $1,000 over four equal payments, with no fees or interest. The service came out to a lot of attention in March 2023. The service was Apple’s response to the growing number of buy-now-pay-later services around the world. It was seen as a major threat to companies like Klarna, Affirm AFRM, -0.84% and others.
But Apple Pay Later could only be used where Apple Pay was accepted. Other buy-now-pay-later services, on the other hand, were deeply integrated into millions of merchant websites.
It was clear that Apple knew how popular buy-now-pay-later services were when it announced this month at its developer conference that banks would soon be able to offer buy-now-pay-later plans to their customers through Apple Pay and Apple Wallet. Apple users would be able to open an Affirm account right from their Apple Wallet, and Affirm would be built right in.
“We will no longer offer Apple Pay Later in the U.S. as of today, as we have launched this new global installment loan service,” Apple said late Monday. “Our goal with Apple Pay remains to give our users easy, safe, and private payment options. This solution will allow us to offer flexible payments to more users in more places around the world, working with banks and lenders that accept Apple Pay.”
Even though Apple said it was going to add Affirm directly to Apple Wallet earlier this month, executives still said the company had plans for Apple Pay Later.
Apple Pay Later was different because Apple had to make its own bank to give out loans. Goldman Sachs GS, 1.38% gives out the Apple Card, which means that Goldman decides who gets approved and how much each customer can spend.
Customers who already have Apple Pay Later loans will be able to manage them in Apple Pay, but Apple is no longer offering new loans through Apple Pay Later.
