Apple Shifts Gears on Buy Now, Pay Later Strategy

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Apple surprised many this week with a two-pronged announcement regarding its buy now, pay later (BNPL) service, Apple Pay Later. Here’s a breakdown of the key points:

Apple is shutting down its own BNPL offering, launched in the US just last year. Existing users won’t be impacted and can continue managing their loans through the Apple Wallet app.

However, Apple isn’t abandoning the BNPL market entirely.  Instead, they’re taking a different approach.  Later this year, Apple Pay users will gain access to various installment loan options directly within the Apple Pay checkout process. 

This shift will involve partnering with existing BNPL players like Affirm.  Customers will be able to apply for Affirm loans directly at checkout, alongside the option to utilize installment plans offered by some credit and debit cards.

 Analysts see several advantages to this strategy.  First, it allows Apple to offer a broader range of BNPL options without the burden of managing a separate service.  Second, by keeping the experience within Apple Pay, Apple retains control of the customer interaction. 

Affirm appears to be a key partner in this new approach.  Analysts point to their strong technology, underwriting expertise, and focus on avoiding late fees for users as factors in Apple’s choice.

While Apple may expand partnerships in the future, they seem to be starting with Affirm for now.  Klarna, another major BNPL provider, declined to comment on the news.  

 Affirm’s stock price saw a slight decline following the announcement.  However, analysts attribute this to broader retail sales data rather than Apple’s specific plans.

Overall, Apple’s move represents a significant shift in its BNPL strategy.  By partnering with established providers, they aim to offer a wider range of options while minimizing risk.  This decision will undoubtedly impact the BNPL landscape, and it remains to be seen how other players like Klarna will respond.