After launching the “Buy Now Pay Later” (BNPL) service in the USA for more than a year, Apple suddenly announced on Monday that it would terminate the service. The global technology giant said it is turning to a new installment loan service provided through third-party credit and debit cards. Some industry insiders say this move signals a retreat from Apple's ambitious plan to become a major provider of traditional financial services.
After launching its Buy Now Pay Later (BNPL) service in the United States for more than a year, the global technology giant suddenly announced on Monday that it would terminate the service. It said it is turning to a new installment loan service provided through third-party credit cards and debit cards. $Apple (AAPL.US)$In addition, when the Buy Now Pay Later service was first popular in the United States, interest rates were low, and consumers were borrowing money to fund their shopping. However, with rising interest rates, the industry is under pressure. One of the largest providers of the BNPL service has seen its market cap drop from a peak of about $45 billion in 2021 to about $9.5 billion today.
Apple stated on its official website: 'With the launch of this new global installment loan service, we will no longer provide Apple Pay Later in the United States. Users who obtained loans through Apple Pay Later can continue to use the service, but no new loans will be offered.'
Apple's 'Buy Now, Pay Later' service, called Apple Pay Later, was announced in March 2023 and was part of the company's efforts to deepen its relationship with consumers through finance. The service allows consumers to split purchases of $50 to $1,000 into four payments over six weeks without paying interest or other fees.
At the launch of the service, industry insiders believed that this was a significant intrusion by Apple into traditional banking services because the related 'Buy Now, Pay Later' service would provide short-term loans to consumers by the tech company itself rather than partnering with banks - providing interest-free loans through its wholly-owned subsidiary, Apple Financing.
Some industry insiders believe that Apple's latest move indicates that this iPhone manufacturer has backed away from its ambition to become a traditional financial service provider.
There were signs of withdrawal.
So why did Apple announce the stop of the 'Buy Now, Pay Later' service just one year after it was launched? Although Apple did not explain this too much in the official statement, many industry insiders have their own guesses.
Since the launch of Apple Card in 2019, Goldman Sachs has been the company's main banking partner, providing convenience for Apple to access the Mastercard network. However, Apple is gradually ending its partnership with Goldman Sachs, which also involves supporting its savings account and credit card business. Relevant news broke as early as November last year.
Affirm's stock price closed at $30.81 on Monday. The stock has almost doubled in the past 12 months, but is still far below its historical high of over $170 at the end of 2021.$Affirm Holdings (AFRM.US)$Its market cap has dropped from a peak of about $45 billion in 2021 to about $9.5 billion now.
It is worth mentioning that while Apple is no longer providing the 'Buy Now, Pay Later' service itself, it announced on Monday that it plans to provide a way for people to apply for other companies' Buy Now, Pay Later services when using Apple Pay to check out - and former rival Affirm is one of the partners.
In addition, at the annual developer conference last week, Apple also announced that, in the United States, users of Citigroup and Synchrony, as well as lenders using software provider Fiserv, will be able to use Apple's installment loan service in the future. In the UK, installment loan functionality will first be launched in partnership with HSBC and Monzo banks. In Australia and Spain, Apple will provide installment loan services through ANZ Bank and CaixaBank, respectively.
Editor/Somer