Apple Shutting Down Pay Later Is An Even Bigger Deal Than You Think. It’s Huge.
Plus, embattled Evolve Bank & Trust reportedly hit by massive ransomware attack.
Number of the Week: $40 billion (explanation below)
Apple Shutting Down Pay Later Is An Even Bigger Deal Than You Think. It’s Huge.
Whenever Apple launches a new service that’s intended to disrupt a market already dominated by disruptors, the world expects Apple to do what it does best: use breathtakingly simple technology and lean into a fiercely devoted customer base to elbow its way in and carve out sizable market share.
Think Apple Music (Spotify, Amazon Music, Pandora), Apple TV+ (Netflix, Amazon Prime Video, Disney+), Apple Pay (PayPal, Venmo, Zelle, Cash App), and Apple Card (Citi Double Cash, Capital One Venture Rewards, Chase Freedom Flex).
So when Apple launched its Pay Later service in March 2023, buy now, pay later (BNPL) providers including PayPal, Afterpay, Klarna, Affirm, Sezzle and Zip predictably girded for battle with the tech giant. Apple Pay Later gave U.S. users the ability to split purchases into four payments over six weeks without interest or fees. Pay Later users could apply for loans up to $1,000 to make online and in-app purchases on iPhones and iPads with merchants that accepted Apple Pay, including more than 85% of U.S. retailers.
From the start, Apple had an immense launchpad for the Pay Later service: There are an estimated 124.7 million iPhone users in the U.S., and 45% of Americans own an iPad. By 2023, there were 55.8 million Apple Pay users in the U.S., with the number projected to climb to 60.2 million this year and 67 million by 2026.
Just 15 months after its debut, and in spite of its early gains in the BNPL market, Apple shut down its Pay Later service. As of June 17, no new loans would be offered for purchases made with Apple Pay, but existing loans and purchases would not be affected by the termination of the Pay Later service, according to the company’s website. (Pay Later was offered by Apple Financing LLC, which was responsible for credit assessment and lending; the service was enabled through a relationship with Mastercard and Goldman Sachs.) “The inevitable hurdles Apple was navigating to maintain its own branded [BNPL] offering were likely more trouble than they were worth. In the end, allowing other established solutions to exist in Apple Pay will probably result in a better customer experience for those Apple Pay customers who use BNPL,” said J.D. Power’s Miles Tullo, managing director, financial services.