Apple is discontinuing its Buy Now Pay Later (BNPL) service known as Apple Pay Later barely a year after its initial launch in the United States, and will rely on companies who already dominate the industry, such as Affirm and Klarna.

It is an acknowledgement, from a company known for producing hit products, that building a financial services business from scratch as Apple has been doing for several years is difficult and highly competitive.

Apple Pay Later launched with fanfare in March 2023 as a way for iPhone customers to split purchases of up to $A1500 ($US1000) into four equal payments with no fees or interest.

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The service was Apple’s answer to the growing popularity of BNPL services globally, and considered a sizeable threat to companies like Klarna, Affirm and others.

But Apple Pay Later was only available where Apple Pay was accepted, whereas the other BNPL companies had deeply integrated themselves into millions of merchant websites.

In an acknowledgement of how popular BNPL services had become, Apple said at its developer’s conference this month that it would start allowing banks to offer BNPL plans to their customers through Apple Pay and Apple Wallet.

Affirm would be integrated directly into Apple Wallet, and Apple customers would be able to open an Affirm account directly.

“With the introduction of this new global instalment loan offering, we will no longer offer Apple Pay Later in the US,” Apple said.

“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.”

Apple executives as recently as this month had indicated that the company still had plans for Apple Pay Later, despite announcing plans to integrate Affirm directly into Apple Wallet.

Apple Pay Later was unique because Apple needed to create its own bank to offer the loans.

The Apple Card is issued by Goldman Sachs, which means Goldman ultimately decides who gets approved and what spending limits are for each customer.

Apple has discontinued any new Apple Pay Later loans, but customers who have existing Apple Pay Later loans will be able to manage them inside Apple Pay.