The company announced that it is discontinuing its buy now, pay later service in favor of external partnerships. The news comes on the heels of increased regulatory scrutiny of these loans.
06/20/2024 10:45 A.M.
2 minute read
Apple is scrapping its buy now, pay later (BNPL) service in favor of enhanced Apple Pay features coming with the ios18 update this fall.
Apply Pay Later, which launched last year, allowed consumers to split purchases from $50 to $1,000 into four payments across six weeks.
Going forward, U.S. consumers will be able to apply for BNPL loans through third parties like Affirm when they check out with Apple Pay.
“In an acknowledgement of how popular buy now, pay later services had become, Apple said at its developer’s conference this month that it would start allowing banks to offer buy now, pay later plans to their customers through Apple Pay and Apple Wallet,” ABC News reported. “Affirm would be integrated directly into Apple Wallet, and Apple customers would be able to open an Affirm account directly.”
Regulatory Scrutiny Increases
In May, the Consumer Financial Protection Bureau issued an interpretive rule that classifies BNPL lenders as credit card providers, ACA International recently reported.
The rule mandates that BNPL lenders extend key consumer rights and legal protections that apply to traditional credit cards, including the right to dispute charges and receive refunds for returned products.
The CFPB’s examination of the BNPL market began in 2021, focusing on issues such as debt accumulation, regulatory arbitrage, and data harvesting. The bureau’s findings indicated that BNPL services are frequently used as substitutes for conventional credit cards. Notably, the CFPB’s report highlighted that over 13% of BNPL transactions involved returns or disputes, amounting to $1.8 billion in 2021 among the five firms surveyed.
The interpretive rule clarifies that BNPL lenders must comply with the Truth in Lending Act’s requirements for credit card providers.
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