Apple Discontinuing Apple Pay Later

https://9to5mac.com/2024/06/17/apple-pay-later-united-states-ending/

by jmsflknr • 2 years ago

62 53 2 years ago

9to5mac.com

mgh22• 2 years ago

Incentivizing people to go into debt for a depreciating asset with no penalty was not a sustainable idea to start with.

bequanna• 2 years ago

Credit cards are still alive and well and are primarily used for consumable/depreciating products.

nicce• 2 years ago

They can usually sell the debt for companies, which are very good at collection debts.

One reason to not do chargeback unless absolutely sure that it is valid.

hot_gril3• 2 years ago

"Apple emphasizes in its statement that its focus is on the new installment loan features coming to Apple Pay later this year. These features will be available in multiple countries around the world. Apple Pay Later, meanwhile, was only ever available in the United States."

Menu_Overview• 2 years ago

Why isn't is sustainable? Bad for customers, good for credit comapnies, but it isn't any different from other kinda of credit card debt, is it?

I considered it a few times, but like, it only spaced the payments out over 6 weeks and I had to unfreeze my credit report so...it wasn't a big win.

mgh22• 2 years ago

What is the collateral if they don't pay? Cc has interest rates and credit scores.

lxgr10• 2 years ago

Only when there are interest charges. If there aren't (as is also the case for credit cards paid off immediately in many countries), and merchants don't offer any other incentives for doing so, why should I pay them upfront?

Quite often, I'm not even receiving goods or services at the time my payment method is charged, so in the end it would be me giving the merchant an interest-free loan!

Letting customers try out the merchandise, potentially swap for a different size of clothes etc. can be a win-win.

tcmart142• 2 years ago

I don't think applies to the Pay Later. But when you look at the Apple credit card, you can finance a, lets say, Macbook Pro for 12 months interest fee with monthly payments that, if made on time, will pay off the device in 12 months. Couple that with Apple high yield savings. If you have the cash to pay for the device, why not chuck the cash into Apple's high yield savings, earn 4.4% APY and just make the interest free monthly payments?

michaelt• 2 years ago

Phone companies have been letting poor people pay for a $1000 iphone with 36 monthly payments of $50 for years.

I know it seems like an absurd business proposition, but apparently they're able to make it work.

emmet2• 2 years ago

Meanwhile Amex have just launched this exact model in the UK called "Plan It", though it costs a fixed fee per month of the loan.

astrange• 2 years ago

That's actually not the same model. The important part of BNPL is that it's offered on the purchase, not as part of your credit card bill. That means the lender can decide not to offer it on any transaction they don't feel safe about, which is a more flexible than your bank/CC who have to trust you'll pay your entire bill.

lxgr10• 2 years ago

Importantly, it's also usually the merchant (and/or the BNPL company) paying for the loan, not the consumer.

In other words, it's just a completely different model from retroactive, cardholder-paid flexible payment options for credit/charge card holders.

emmet2• 2 years ago

Am I incorrect in thinking Apple Pay Later only works with the Apple Card? Or was it available for all cards as long as you used Apple Pay to check out?

If that were the case I can see this being like the third party BNPL schemes such as Klarna sure. Otherwise it’s just semantics of where the option lives.

bombcar• 2 years ago

Can someone explain these buy now pay later that aren't just a 0% credit card offer? Why do they even exist?

bogantech• 2 years ago

Skirting regulations

didip• 2 years ago

This is very convenient for consumers. I don't know why anyone wouldn't want it.

lxgr10• 2 years ago

Nobody capable of high school level of math and with access to a credit card should rationally want to use BNPLs, at least in the US:

Credit card payments have an average payment due date of 6 weeks (0-4 weeks until statement cutoff, 4 further weeks until payment due date without interest charges), no interest charges when paid within that timeframe, and offer around 1-2% of cashback.

BNPLs have 25% due at 0, 2, 4, and 6 weeks respectively, for an average due date of 3 weeks, and usually don't offer any cashback. In other words, you get half as long to pay back the loan and miss out on 1-2% of opportunity cost on top of that.

The fact that people still use them shows that either some consumers value other things more highly than just the strictly best deal from a financial point of view, or is a concerning piece of evidence of a lack of financial literacy (or both).

spoonjim• 2 years ago

If you can’t pay for it today you can’t afford it, unless it’s a financial investment, which wouldn’t be something you’d use Apple Pay for.

nikkev• 2 years ago

There are two types of BNPL loans: interest free and short-term interest-bearing accounts. In theory BNPL has a couple interesting advantages. First you're underwriting each individual purchase whereas a credit card involves underwriting a line of credit to a consumer. This enables BNPL providers to charge different prices depending on the product being purchased, for example someone making 2,000 a month trying to buy a 1,200 phone may warrant a higher interest rate. Also given the shorter term they should be able to better optimize their rates versus a credit card which is a pre-approved rate across the entire line of credit.

itake2• 2 years ago

for example someone making 2,000 a month trying to buy a 1,200 phone may warrant a higher interest rate.

Why would the interest rate be different from someone making 2,000 a month trying to buy 1,200 $1 widgets?

nordsieck• 2 years ago

Can someone explain these buy now pay later that aren't just a 0% credit card offer? Why do they even exist?

There's all sorts of manufacturers that offer 0% financing. Presumably:

* A small cost in financing can dramatically increase their deal flow which makes the whole thing worth it.

* A lot of these deals have pretty punishing terms where if the customer can't pay on time, they get hit with all of the interest anyhow. Not sure if that's true of Apple's deal in particular.

itake2• 2 years ago

stab in the dark: it lowers the upfront cost of the item dramatically. Instead of needing to save 2 paychecks to own an item, you can own the item now and pay out the savings from your future paychecks.

For the merchants of high ticket items, it makes their product's more accessible to people with low-savings. So the merchant offers 0% rates.

quitit• 2 years ago

0% credit card offers usually include an establishment fee and will charge interest, fees or both for late payments. Some are also merely introductory offers to a permanent credit card.

Apple Pay Later did not include fees or interest for the establishment of the loan or for late payments. This made the offer unique in this space. https://support.apple.com/en-us/108419

However the compromise for such terms was a minimum purchase threshold of $50 and a maximum purchase limit of $1000 per sale, the requirement of a linked debit account (i.e. not a credit card), and Apple's ability to deny further Apple Pay Later purchases. Whereby the app simply didn't present the option.

deergomoo2• 2 years ago

I always thought this was a very odd thing for Apple to get into.

Apple Pay Cash seems like it makes sense (at least in the US; it never launched here in the UK, but there would be very little point in it anyway), but this and the Apple Card always seemed a little bit gross. Especially because I would presume most of the money is made from people who are less well off.

skhunted• 2 years ago

I think in the U.S. the most profitable customers of credit cards are the well to do because they buy so much more than poorer people.

deergomoo2• 2 years ago

Ah yeah that's fair; I was thinking more interest and penalties but I guess taking a percentage on all transactions almost certainly would work out to be more

rcxdude• 2 years ago

Credit card companies make a decent amount of their money from the interchange fees, but the majority of their income comes from interest, cash advance fees, and penalty fees, all of which the well-off credit card user paying off their balance each month does not contribute to. So credit card companies are probably making more money off their less-well-off users as a group than the more-well-off, though it may still be that individual well-off users are more profitable than other individuals.

tiffanyh• 2 years ago

Companies getting into Finance/Lending is common when you sell an expensive consumer good ...

- GM created GMAC Financial to help consumers buy GM automobiles, 100-years ago.

- Apple created Apple Financing LLC, to help consumer purchase expensive phones & laptops.

lxgr10• 2 years ago

Apple Pay Later is distinct from Apple's installment payment options for their own products, which have been around considerably longer, though.

lotsofpulp• 2 years ago

What is Apple Financing LLC? iPhone upgrade program is underwritten by Citizens Bank, and Apple credit card is underwritten by Goldman Sachs.

Apple Pay Later might be the only thing Apple underwrote, as far as I can tell.

lxgr10• 2 years ago

One potentially relevant point here is that Apple Pay Later was being funded by Apple directly, whereas Apple Card was on Goldman Sachs's balance sheet.

Obviously they might have been borrowing the capital from or outsourcing the risk of the former to a third party, or participating in the lending of the latter via some revenue sharing agreement; I have no idea about their particular deal for the Apple Card.

Khaine• 2 years ago

Weird that they have just announced a partnership with ANZ Bank in Australia to offer the same BNPL service in Australia[1]

[1] https://www.afr.com/companies/financial-services/apple-to-dr...

Apple Discontinuing Apple Pay Later

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