The Evolution of Pay-Later Options: A Bite into APPLE's Strategic Shift

Apple’s digital payments saga continues, this time with a sequel involving an end to the tech company’s short-lived experiment with Buy Now Pay Later. The service, Apple Pay Later, was introduced at the Worldwide Developer Conference (WWDC) in June 2022 with great fanfare. It promised a new reality of financial services that Apple would facilitate. With broad plans public since the introduction of Apple Pay in 2014, Apple made good on its promise to build a BNPL system last October. Unveiled at the same September 2022 event where it announced the iPhone 14, Apple Pay Later was set to roll out with some fanfare in the US. Two years after the big announcement, and seven months after Apple Pay Later finally came to the US, the company is ending its plans. But not to worry. It’s just an ending, not the ending; it’s just a pivot, not defeat. Apple is partnering with Affirm to offer loans that integrate with Apple Pay. Apple Pay Later has not yet ended. Instead, it’s being reborn.

A Sudden Goodbye to APPLE Pay Later

Apple Pay later ending was unexpected for many. It was innovative while it lasted. For the short time it existed, it allowed consumers to buy things and easily spread the cost of purchases over time, all within the Apple Pay environment, offering flexible payment terms and making it easier for customers in the US to shop. But then, after its developer conference, Apple announced that it would broaden installments payment options through a partnership with the third-party service Affirm, and reduce the reliance on its own instalment plan solution. This would enable Apple to pursue a more global strategy, making its offering available to a wider array of consumers and rendering Apple Pay later redundant.

AFFIRM Steps Into the Spotlight

The void left by Apple Pay Later is now being filled by Affirm, a company that offers payment solutions on flexible instalments. In fact, through this strategic collaboration, Apple will now be accesseding third-party excellence to add richness to its ecosystem. ‘In the US, users checking out with Apple Pay will also be able to apply for loans directly with Affirm,’ Apple announced in its recent post on the newsroom. With this collaboration, Apple customers will continue to enjoy flexible payment options and the benefits of this service will be extended to customers worldwide, establishing Apple’s commitment to offering value-added services to its vast user base.

Implications for Current APPLE Pay Later Users

In the short term, some level of sanity prevailed. Even though Apple would no longer provide new “Pay Later” options, existing customers could keep doing what they would normally do, monitoring new plans through the Wallet app, or their activity accounted for in their Apple Cash card. In other words, current Apple-loving borrowers of the world are not opening their iPhones to a shocking surprise.

A Global Vision for Installment Payments

‘Later this year, we’re expanding the availability of instalments to users around the world when using Apple Pay at checkout with any card or lender,’ Apple writes to TechCrunch in a statement. From the humble beginnings of PayPal credit, the ability to make purchases today and pay in the future has been mainstreamed. Apple’s global effort, bringing the flexible payment option once confined to Wells Fargo to the rest of the world, could presage a new normality – checkout is just another digital affordance. As is typically the case with Apple, this development builds upon a rapidly growing ecosystem of novel, innovative financial services. Apple created Apple Card, which allows cardholders to ‘make payments in as little as half-payments using instalments’, its own take on the concept. Third-party lenders also enable Apple Pay instalment loans – Credit Karma has a product, Avant has a product. While these features are available only to Apple Card users, competition among fintechs fuels a market for more convenient and cheaper loans. In this regard, once again, Apple is pursuing its ideals: ‘We believe that a digital future should be available for everyone, big or small,’ Apple recently wrote to the World Trade Organization (WTO). This time, its pursuit of open markets relates to the still-emerging area of financial technology.

The Strategic Rationale Behind the Shift

It would be a mistake, however, to read too much into Apple’s decision to end Pay Later and partner with Affirm to replace it. In many ways, this move reflects how Apple intends to grow its services suite and reduce its product lines. It allows Apple to work with already established players in the financial services industry, who possess the required infrastructure and skills to provide new services to Apple customers. This is a win-win situation for both Apple and its third-party partners. Apple doesn’t need to get into the intricacies of running a credit business. It simply needs to focus on the services that it does well, ensuring that its payment services are at the forefront of technology and customer convenience.

The Unfolding Future of APPLE's Financial Services

At this point in the game, it’s not clear that Apple is pulling back, just shifting gears: Apple Pay Later morphed into Affirm loans, indicating a step into a more embedded, adaptive and inclusive financial system.

Exploring the Core of APPLE

Ultimately, however, Apple is and always will be an innovation company. At its best, it has always endeavoured to do things that have never been done before. It turns the status quo on its head. This new tack in its financial services strategy is another indication that Apple will do what it needs to provide what its global customer base of users needs – with value, convenience and experience always at the forefront of its mind. By changing, but over-delivering, Apple is setting the stage for the next wave of digital payments by partnering with fellow innovators such as Affirm. It is the path that every company should pave if it wishes to survive and thrive. Again, kudos to Apple for leading the charge.

Jun 18, 2024
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