Tech giant Apple has announced plans to halt the issuing of loans through its buy-now-pay-later program in the United States, opting to roll out a new installment loan offering.
Apple disclosed that users who wanted installment plans at checkout would gain access to them through other financial intermediaries in more countries across the globe.
This strategic shift is coming after the Cupertino giant announced that it would start allowing installment loans later this year in its Apple Pay checkout processes through third-party companies, such as Affirm and Citigroup.
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Affirm will surface as an option for U.S Apple Pay users on iPhones and iPads later this year, providing users with additional payment choices and offering the ease of convenience and security of Apple Pay alongside the features in Affirm such as flexibility, transparency, etc.
With the integration of Citigroup in its Buy-Now Pay Later Program, Apple noted that it would introduce installment loans via credit and debit cards, as traditional credit card players have begun offering BNPL-style installment loans which gained popularity during the COVID pandemic.
A spokesperson at Apple said,
“Starting later this year, users across the globe will be able to access installment loans offered through credit and debit cards, as well as lenders, when checking out with Apple Pay. With the introduction of this new global installment loan offering, we will no longer offer Apple Pay Later in the U.S”.
Apple said its priority with Apple Pay, the brand name for its contactless and online payment software, was to enable secure and private payments. Users with open loans will continue to have access to Apple Pay Later features to manage and pay their loans, Apple said.
The new installment loan service will allow Apple customers to make larger purchases and spread the cost over a fixed period with equal monthly payments. Unlike the BNPL model, which typically breaks down payments into a few smaller installments over a short term, Apple’s new offering will cater to those seeking longer repayment terms and greater financial flexibility.
Before it was discontinued, Apple Pay Later enabled users to apply for loans within the iPhone Wallet app, and approved users would see a “Pay Later” option when checking out online.
Notably, Apple’s strategic shift in loan offering is expected to impact the competitive landscape of digital lending and consumer finance. The offering will likely attract consumers who prefer the stability and predictability of longer-term repayment plans over the convenience but potential pitfalls of BNPL options.
In conclusion, Apple’s introduction of installment loans in place of BNPL services signifies its commitment to evolving and improving its financial products. This new offering is designed to provide customers with a more manageable and transparent way to finance their purchases, reinforcing Apple’s position as a leader in both technology and consumer finance.