Apple Pay Later is no more. Here’s what it means for you

( NewsNation ) — Apple is discontinuing its “buy now, pay later” service , but purchases will remain a click away as the company turns to established industry players like Affirm and Klarna.

Apple announced earlier this month that it would allow banks to offer buy now, pay later plans via Apple Pay and Apple Wallet, according to the Associated Press. Affirm will be integrated into Apple Wallet, meaning Apple users can directly set up an Affirm account and use it through their digital wallet.

Although the tech company will no longer dole out loans as a financing option, Apple still collects a fee from banks when its cardholders use Apple Pay, according to an October Wall Street Journal report.

That’s significant since Apple Pay has become the most popular digital wallet for in-store shoppers and is working toward allowing users to redeem rewards from credit card partners, Axios reported .

What happened to Apple Pay Later?

Apple released its buy now, pay later service, Apple Pay Later, in March 2023, allowing users to make four equal payments with no interest or fees on purchases up to $1,000. Alternative models like Klarna and Affirm, however, remained more accessible and convenient by already being a payment option on millions of websites, the Associated Press reported .

Apple Pay Later, on the other hand, was exclusive to merchants that accepted Apple Pay.

The service also meant Apple needed a bank to offer those loans to customers. Ultimately, Goldman Sachs issued the Apple Card, meaning the bank had the final say over who it approved and how much they could spend, according to the AP .

Those with outstanding loans can still manage them via Apple Pay.

Apple is still making money

Apple collects a fee from banks when cardholders use Apple Pay. The convenience of mobile payment services also tends to drive up consumer spending, compared to credit card payments, CBS reported, citing a study out of the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill.

Credit card companies have taken issue with those added fees, however, and have tried to urge Visa to adjust how it processes some Apple Pay transactions, the Wall Street Journal reported, citing unnamed “people familiar with the matter.”

As of October, Visa had plans to implement the change this year, despite Apple’s reported opposition, according to the Wall Street Journal .

The alleged new process would eliminate bank fees for automatic, recurring payments for services like gym memberships and streaming subscriptions, according to the Wall Street Journal.

Apple Pay’s success

Despite the challenges that faced Apple Pay Later, Apple Pay as a whole has flourished since its release. It managed to surpass PayPal as shoppers’ preferred in-store digital wallet last year, according to research and data group PYMNTS Intelligence .

In early 2022, PayPal remained retail shoppers’ favorite digital wallet by far, but Apple Pay caught up, briefly overtaking PayPal in Q1 of 2023, according to PYMNTS data. As of Q2 of 2024, 12% of consumers reported using a digital wallet to cover their most recent retail purchases. Of those customers, about 6% used Apple Pay, and 4% used PayPal.

Apple Pay also boasts five times the market share of Google Pay, Axios reported .

The increased use of Apple Pay is in step with overall growing mobile sales.

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