Apple Discontinues Pay Later Loan Scheme, Shifts to Third-Party Lenders.

By Caroline Ameh

Apple has decided to terminate its in-house buy now, pay later scheme in the United States, just a year after its launch, signaling a retreat from its foray into traditional financial services. The tech giant announced Tuesday morning that it will now collaborate with third-party credit and debit card lenders to offer payment plans to customers.

Under the now-defunct Apple Pay Later scheme, users in the US could split payments for purchases up to $1,000 (£788) into four instalments over a six-week period, without incurring interest or fees. This initiative marked Apple’s initial step into providing financial services directly to consumers, circumventing traditional banks and lenders by utilizing its subsidiary, Apple Financing, to issue loans.

However, amid changes in economic conditions and rising interest rates aimed at curbing inflation, Apple has opted to discontinue its proprietary financial service model. Existing borrowers will still have the option to manage their payments through Apple’s Wallet app, despite the scheme’s discontinuation.

During Apple’s recent annual developer event, the company announced a strategic shift towards collaborating with established financial institutions. Partnerships with banks like Citi in the US, HSBC in the UK, and ANZ in Australia will enable Apple to offer alternative instalment payment options. These new payment solutions are expected to be integrated into the upcoming iOS 18 operating system, slated for release later this year.

The move underscores Apple’s evolving strategy in the financial services sector, leveraging partnerships to enhance its consumer offerings while mitigating the operational complexities associated with direct lending activities.