Apple Shuts Down Apple Pay Later

In a significant strategic shift, Apple Inc. (AAPL) has announced the immediate shutdown of its Apple Pay Later service. This move will pivot the tech giant towards providing users with installment loans through credit and debit cards, and third-party lenders such as Affirm (AFRM). The news was first reported by 9to5Mac on Monday evening.

“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,” an Apple spokesperson told 9to5Mac. Consequently, Apple will no longer offer its buy now, pay later (BNPL) service in the U.S.

A Shift in Strategy

Apple’s decision to discontinue Apple Pay Later reflects its ongoing commitment to providing easy, secure, and private payment options via Apple Pay. The spokesperson elaborated, “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.”

Transition for Current Users

For those with active loans through Apple Pay Later, Apple assures that they can still manage and pay their loans using the Apple Wallet App. This transition aims to maintain user convenience and trust while shifting the payment model.

Background and Impact

Apple Pay Later initially launched in October 2023, following a limited release to select users in March 2023. The service allowed users to split eligible purchases of $75 to $1,000 into four equal payments over six weeks without any fees or interest. Despite its discontinuation, Apple continues to see strong support from Wall Street.

Market Reaction and Analyst Insights

According to S&P Global Market Intelligence, the consensus recommendation among the 44 analysts tracking Apple is a Buy. However, analysts’ price targets have struggled to keep pace with Apple’s surging share price, driven by the company’s recent earnings release and announcements at the Worldwide Developers Conference (WWDC) 2024, which highlighted its artificial intelligence (AI) initiatives.

Since the earnings release on May 2, Apple’s shares have risen more than 23%, and they have climbed over 10% since WWDC began on June 10. Currently, the average price target is $205.91, which is nearly 4% below the current share price.

Wedbush remains the most optimistic, maintaining a Buy rating with a Street-high price target of $275. “We believe Apple’s AI strategy will leverage its golden installed base around personalization and large language models (LLMs) on the phone that should change the growth trajectory of Cupertino and spur an AI-driven iPhone upgrade cycle starting with iPhone 16,” Wedbush analyst Daniel Ives noted post-WWDC 2024.

Ives added that “Apple is taking the right path to implement AI across its ecosystem,” and is laying the groundwork for a “multi-year AI strategy across the strongest installed base of 2.2 billion iOS devices over the coming years, with the Street giving no credit for AAPL’s AI monetization.”

Wedbush’s price target of $275 represents an implied upside of nearly 30% from current levels.

Conclusion

While the discontinuation of Apple Pay Later marks the end of a specific service, it underscores Apple’s broader strategy of evolving its financial offerings to meet global user needs. With a strong focus on AI and flexible payment solutions, Apple continues to innovate and adapt, maintaining its position as a market leader in technology and consumer services.