## Apple Ends “Buy Now, Pay Later” Service Citing Regulatory Issues
Apple has made a notable change in its financial service offerings by ending its “buy now, pay later” (BNPL) service, Apple Pay Later. Originally launched in March 2023 and gaining wider availability in October, this service allowed users to split purchase costs into four payments over six weeks without any added fees or interest. However, due to regulatory challenges and changing market conditions, Apple chose to discontinue the service and is now exploring new ways to provide installment loans globally.
The Journey of Apple Pay Later
Launch and Initial Success
Apple Pay Later was designed to attract more users to Apple Pay and expand Apple’s financial services sector. It quickly became popular, especially with younger consumers already familiar with BNPL options. According to a JD Power survey, almost 20% of BNPL customers used Apple Pay Later in its first three months.
Regulatory Challenges
Despite its early success, Apple Pay Later faced considerable regulatory scrutiny. The US Consumer Financial Protection Bureau (CFPB) began investigating BNPL services, pointing out risks such as privacy concerns and the potential for excessive debt. These issues weren’t exclusive to Apple but were part of a larger regulatory focus on BNPL services.
Apple’s New Installment Loan Offering
Expanding Internationally
Reacting to the regulatory atmosphere, Apple decided to end Apple Pay Later and launch a new global installment loan program. This new service will enable users to obtain installment loans via credit and debit cards when checking out with Apple Pay. Unlike Apple Pay Later, which was US-only, this new program will be available in multiple countries.
Bank Partnerships
Apple is collaborating with several banks, including Citi in the US, to offer these short-term loans. This partnership aims to provide more flexible payment options to a wider audience while ensuring adherence to local regulations.
Consumer Protections and Compliance
New CFPB Guidelines
The CFPB has recently issued guidelines that require BNPL lenders to offer consumers legal protections similar to those provided by credit cards. These protections include rights to dispute charges and get refunds for returned products. By discontinuing Apple Pay Later, Apple can avoid the strict requirements the CFPB plans to enforce on BNPL lenders.
Building Consumer Trust
Apple has reassured current Apple Pay Later users that their existing loans and purchases won’t be impacted. The refund procedure for returned items will remain unchanged. Customers can still manage their loans through their wallets and reach out to Apple Support for assistance.
Summary
Apple’s decision to discontinue its BNPL service, Apple Pay Later, represents a strategic shift in its financial services approach. By focusing on a new global installment loan program, Apple aims to offer more secure and flexible payment solutions while navigating complex regulatory requirements. This strategy not only aligns with emerging consumer protection guidelines but also positions Apple for global expansion in financial services.
Q&A Session
1. Why did Apple discontinue Apple Pay Later?
Apple ended Apple Pay Later due to regulatory challenges and changing market conditions affecting BNPL services. The company aims to provide a more compliant and globally accessible installment loan solution.
2. Will existing Apple Pay Later loans be affected?
No, ongoing Apple Pay Later loans and purchases will not be impacted. Customers can manage their loans through their wallets and contact Apple Support if needed.
3. What is Apple’s new installment loan program?
Apple’s new installment loan program offers users short-term loans through credit and debit cards at the time of checkout with Apple Pay. This program will be available internationally, providing more flexible payment options.
4. How does the new program differ from Apple Pay Later?
While Apple Pay Later was limited to the US, the new installment loan program will be globally available. It also involves collaborations with banks like Citi to provide these loans.
5. What consumer protections are included in the new program?
The new program will follow guidelines from regulatory bodies like the CFPB, ensuring consumer rights to dispute charges and receive refunds for returned items.
6. How can consumers apply for these new installment loans?
Consumers can apply for installment loans through participating banks or lenders directly when using Apple Pay at checkout.
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