Apple announced it is shutting down its Buy Now Pay Later (BNPL) service. The announcement was made via a statement to the popular 9to5Mac website. In the statment, Apple states the reason for the shutdown is a desire to focus on financing products delivered through credit and debit cards, as well as other lenders.
Starting later this year, users across the globe will be able to access installment loans offered through credit and debit cards, as well as lenders, when checking out with Apple Pay. With the introduction of this new global installment loan offering, we will no longer offer Apple Pay Later in the U.S. Our focus continues to be on providing our users with access to easy, secure and private payment options with Apple Pay, and this solution will enable us to bring flexible payments to more users, in more places across the globe, in collaboration with Apple Pay enabled banks and lenders.
The timing of the announcement is odd. BNPL is increasingly popular. Experian research from 2023 found that 75% of consumers use some form of BNPL payments, with more than 1 in 10 use them for weekly purchases. purchases. Apple is not one to miss an opportunity to engage with 75% of consumers–or to invite third parties into its ecosystem lightly. Looking past the marketing speak, the true reason for the decision is being hidden behind a wall of PR “we’re doing this for our customers” nonsense.
We can’t know the true reason behind the decision, but the recent announcement that customers will be able to access credit through Apple Pay via Affirm underscores the difficultly of offering credit products. It’s not unreasonable to believe that a contributing factor was the high rate of BNPL fraud relative to other forms of consumer credit. Research from Payments Magazine in 2021 found that 23% of application fraud victims had their information used to open a BNPL account.
Although the decision was certainly made for many different business reasons, it’s not unreasonable to believe that, given that high rate of fraud, it’s likely Apple was happy to get rid of the headache. This only serves to underscore the difficulties involved in managing the proliferation of new products and technologies from a fraud perspective. Don’t be surprised to see increasing specialization in the coming years as incumbent ecommerce players come to understand how large and difficult the problem of fraud prevention really is.
-The Editorial Board