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Apple Discontinuing Apple Pay Later

62 points by jmsflknr 2y ago

mgh2 2y ago
Incentivizing people to go into debt for a depreciating asset with no penalty was not a sustainable idea to start with.
- bequanna 2y ago
  Credit cards are still alive and well and are primarily used for consumable/depreciating products.
  - nicce 2y 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.
    - lxgr 2y ago
      Not sure I see the relation between chargebacks and issuers selling off bad debt: Chargebacks are either paid for by the acquiring merchant or the issuer; in both cases (if accepted by the issuer), they extinguish the cardholder's debt to the issuer.
- Menu_Overview 2y 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.
  - mgh2 2y ago
    What is the collateral if they don't pay? Cc has interest rates and credit scores.
    - gruez 2y ago
      >What is the collateral if they don't pay? It's unsecured, just like a credit card. >Cc has interest rates and credit scores. AFAIK BNPL products either change interest directly to the consumer or is subsidized by the merchant. There's also a credit check prior to it being granted, so it's not like they're handing it out to just anyone.
- hot_gril 2y 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."
- lxgr 2y 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.
  - tcmart14 2y 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?
    - lxgr 2y ago
      If there's an even longer term interest-free loan, of course I'll usually take it! BNPLs are decidedly not that, though – see here for some back-of-napkin math: https://news.ycombinator.com/item?id=40711149 https://news.ycombinator.com/item?id=40711149
      - tcmart14 2y ago
        For sure, the BNLP is no where near as good at the credit card deal. In the apple specific case with the apple card, you'd be leaving the 3% cash back on the table where as the links shows, you won't get that with the BNLP. Which for a $2,000 MBP with 3$ cash back, you'd get $60 on the cash back making the device effectively $60 bucks cheaper. And a little more cheaper if you put the cash in the HYSA. My guess to answer the question at the bottom of your comment you linked. Its a mix. For some, its a lack of financial literacy. For others, its not being bothered with other options and taking the first option thrown in their face (even unaware that better option exists). Which in Apple's case, seems like a perfect way to push their credit card, and can use that to push it harder. Why even bother with BNLP when there is a better option. I also imagine Apple benefits more from the credit card than they do their partnerships with Affirm. But that would just purely be a guess.
- michaelt 2y 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.
emmet 2y 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 2y 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.
  - lxgr 2y 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.
  - emmet 2y 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 2y ago
Can someone explain these buy now pay later that aren't just a 0% credit card offer? Why do they even exist?
- bogantech 2y ago
  Skirting regulations
- didip 2y ago
  This is very convenient for consumers. I don't know why anyone wouldn't want it.
  - lxgr 2y 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).
    - dialup_sounds 2y ago
      Gen Z doesn't have a credit card. They have a debit card issued by some not-bank fintech app. BNPL appeals to them.
      - lxgr 2y ago
        Where did you get that idea? 86% of Gen Z members (with a credit score, and you usually need one to rent) have a credit card in the US: https://www.experian.com/blogs/ask-experian/research/gen-z-and-credit/ https://www.experian.com/blogs/ask-experian/research/gen-z-a...
deergomoo 2y 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 2y 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.
  - deergomoo 2y 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
    - william45123 2y ago
      My understanding is that goldman sachs, who operates the apple card under the hood, is trying to get out of the deal because they lose money on it. I presume that the type of person who wants an apple card is strongly negatively correlated with the kind of person from whom they could make lots of money via fees from. I would bet my apple card balance that the percentage of apple card customers who religiously pay off their balance every month is much much higher than industry average.
      - stefan_ 2y ago
        Not to interrupt the "Apple buyer are sophisticated high status individuals" talk but Goldman is losing money on the Apple card precisely because they are lending to people that can't make the payments.
        2y ago
Khaine 2y 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-drive-iphone-users-towards-buy-now-pay-later-loans-20240611-p5jktz https://www.afr.com/companies/financial-services/apple-to-dr...
Mathewfalter 2y ago
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62 points by jmsflknr 2y ago

mgh2 2y ago

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

bequanna 2y ago
Credit cards are still alive and well and are primarily used for consumable/depreciating products.
- nicce 2y 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.
  - lxgr 2y ago
    Not sure I see the relation between chargebacks and issuers selling off bad debt: Chargebacks are either paid for by the acquiring merchant or the issuer; in both cases (if accepted by the issuer), they extinguish the cardholder's debt to the issuer.
Menu_Overview 2y 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.
- mgh2 2y ago
  What is the collateral if they don't pay? Cc has interest rates and credit scores.
  - gruez 2y ago
    >What is the collateral if they don't pay? It's unsecured, just like a credit card. >Cc has interest rates and credit scores. AFAIK BNPL products either change interest directly to the consumer or is subsidized by the merchant. There's also a credit check prior to it being granted, so it's not like they're handing it out to just anyone.
hot_gril 2y 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."
lxgr 2y 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.
- tcmart14 2y 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?
  - lxgr 2y ago
    If there's an even longer term interest-free loan, of course I'll usually take it! BNPLs are decidedly not that, though – see here for some back-of-napkin math: https://news.ycombinator.com/item?id=40711149 https://news.ycombinator.com/item?id=40711149
    - tcmart14 2y ago
      For sure, the BNLP is no where near as good at the credit card deal. In the apple specific case with the apple card, you'd be leaving the 3% cash back on the table where as the links shows, you won't get that with the BNLP. Which for a $2,000 MBP with 3$ cash back, you'd get $60 on the cash back making the device effectively $60 bucks cheaper. And a little more cheaper if you put the cash in the HYSA. My guess to answer the question at the bottom of your comment you linked. Its a mix. For some, its a lack of financial literacy. For others, its not being bothered with other options and taking the first option thrown in their face (even unaware that better option exists). Which in Apple's case, seems like a perfect way to push their credit card, and can use that to push it harder. Why even bother with BNLP when there is a better option. I also imagine Apple benefits more from the credit card than they do their partnerships with Affirm. But that would just purely be a guess.
michaelt 2y 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.

emmet 2y 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 2y 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.
- lxgr 2y 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.
- emmet 2y 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 2y ago

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

bogantech 2y ago
Skirting regulations
didip 2y ago
This is very convenient for consumers. I don't know why anyone wouldn't want it.
- lxgr 2y 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).
  - dialup_sounds 2y ago
    Gen Z doesn't have a credit card. They have a debit card issued by some not-bank fintech app. BNPL appeals to them.
    - lxgr 2y ago
      Where did you get that idea? 86% of Gen Z members (with a credit score, and you usually need one to rent) have a credit card in the US: https://www.experian.com/blogs/ask-experian/research/gen-z-and-credit/ https://www.experian.com/blogs/ask-experian/research/gen-z-a...

deergomoo 2y 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 2y 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.
- deergomoo 2y 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
  - william45123 2y ago
    My understanding is that goldman sachs, who operates the apple card under the hood, is trying to get out of the deal because they lose money on it. I presume that the type of person who wants an apple card is strongly negatively correlated with the kind of person from whom they could make lots of money via fees from. I would bet my apple card balance that the percentage of apple card customers who religiously pay off their balance every month is much much higher than industry average.
    - stefan_ 2y ago
      Not to interrupt the "Apple buyer are sophisticated high status individuals" talk but Goldman is losing money on the Apple card precisely because they are lending to people that can't make the payments.
      - 2y ago

Khaine 2y 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-drive-iphone-users-towards-buy-now-pay-later-loans-20240611-p5jktz https://www.afr.com/companies/financial-services/apple-to-dr...

Mathewfalter 2y ago

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