Apple’s BNPL Bust: Why the ‘Buy Now, Pay Later’ Dream Ended So Abruptly

Sometimes, credit can be a good thing, and you can get your item even if you don’t have the cash to pay right away. This was an excellent deal, although briefly for U.S. Apple customers. The deal has ended, but here’s why. 

Sparking Great Ideas 

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Apple announced its plans for the “Apple Buy Now Pay Later” (BNPL) service in early 2023. The U.S. enjoyed the service from October of that year, and it was great for many Apple customers. 

Customers Enjoy Their Products

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No cash, no problem! With the pay later option, customers could buy their product and pay it off in four equal installments without interest.  

It Had Limitations 

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While the concept was excellent for many existing and potential American Apple customers, it was only available in the U.S. Thus, the chances of gaining more customers through the service were limited. 

Using a Third Party 

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Apple resorts to a third party for their loan installments paid by customers. With the competition high in the buy now pay later industry, this would be another challenging venture to maintain, seeing as many others are already far advanced in the game. 

Who Would Apple Be Up Against if They Stayed In? 

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If the iPhone manufacturer stayed on board with offering a buy now pay later service, they would be up against some serious competition. Some big names in this industry include Curve, ePayLater, Addi, Affirm, Sezzle, Zip, PayPal, and Laybuy to name a few.  

Ending the Perk Of Pay Later 

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In June 2024, Apple announced that it would no longer have the buy now and pay later feature within its customer service line. 

What the Company Said 

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According to reports from Verdict, Apple also said, ” With the introduction of this new global installment loan offering option, we no longer offer Apple Pay Later in the U.S.”

How Will It Affect Current Loan Customers? 

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The company has made provision for existing buy now pay later customers to enjoy the continued benefits at the deal original deal without having to change their agreement. 

Apple Wallet to Do More 

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Now, with Apple Wallet, the company says that customers with buy now pay later loans are still able to pay via the wallet.  

Not that Appealing to Customers 

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The Macbook giant said the buy now, pay later option wasn’t attracting enough customers. Competition with other companies could have caused this reaction. 

It Looked Like a Good Venture 

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The company has also said that the rates were much lower when the service was launched, making it seem like a good investment at the time. 

The U.S. Economy Also Affects The Buyer’s Interest 

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Still, as time went by, the interest rates increased by a large fraction putting a damper on spending habits. As a result, consumers and potential customers were no longer interested in adding more debt into the equation. 

Other Parties Influence Too

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The Consumer Financial Protection Bureau (CFPB) added certain factors to curb overspending. According to the CFPB, the BNPL can lead to over-expenditure and bad debt for consumers. 

What Were Businesses to Do? 

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BNPL providers were said to provide monthly statements to their customers to keep track of their payments. At the same time, consumers must also be protected in terms of product refunds and exchanges. 

Consumer Disputes and Returns 

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The CFPB has studied patterns in customer spending using the BNPL option. In 2021, its records showed customers disputed and returned products worth almost $1.8 billion. These records were only compiled using five major BNPL companies. 

BNPL to Abide by Rules and Regulations of Consumer Protection

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Consumers “….are entitled to important consumer protections under longstanding laws and regulations already on the books,” Rohit Chopra, CFBP Director, said in a statement. 

What Made Apple BNPL Different?

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“Unlike Klarna and others which charge retailers a percentage of each transaction completed to BNPL, Apple’s BNPL product isn’t tied to retailers since its available through Apple Wallet.” GlobalData analyst Yasha Kuruvilla said in an interview with Verdict. 

Too Many Hurdles 

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In an interview with Verdict, Moshe Winegarten, Chief Revenue Officer at Ecompay, said that Apple faced many challenges in establishing its BNPL service. Given the economic changes and customer spending patterns, these challenges might not have been beneficial. 

It Was Probably for the Best and “No Surprise” 

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For Winegarten, Apple’s decision to part ways with its BNPL plan came as “no surprise” and was probably for the best. 

All Is Not Lost

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Apple has encouraged consumers to keep paying their loans previously acquired through BNPL. The loans are conveniently managed via Apple Wallet with payment and billing information.

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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.