June 18 (Reuters) - Although Apple is

discontinuing its buy now, pay later service launched last year,

the company is sticking with the product, with a successor to

the offering launching later this year via third-parties like

Affirm.

Buy now, pay later (BNPL) exploded in popularity as the

COVID-19 pandemic forced more shoppers online, and the product

has continued to resonate with consumers. BNPL loans drove $75

billion in online spending in 2023, up 14.3% from 2022,

according to Adobe Analytics.

In a statement on Monday, Apple ( AAPL ) said its new 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." It did not comment further about why it was

ending its independent BNPL offering.

Existing users of the BNPL service, Apple Pay Later will

still be able to manage and pay open loans via the Wallet app,

the company said.

Apple ( AAPL ) announced last week that Apple Pay users would be able

to access new installment loan offerings this fall, including

the ability to apply for BNPL loans directly through Affirm when

they check out with Apple Pay. Customers will also be able to

access installments from credit and debit cards, the tech giant

said.

Analysts had viewed Apple's ( AAPL ) original BNPL product as a

competitor to BNPL providers like Affirm. It offered customers

the ability to buy products and pay in four interest-free

installments for items up to $1,000. Affirm offers users the

option to pay for products in two or four installments, as well

as monthly installments for higher-cost items.

"To me, this sounds a lot like what we see happening with

debit cards," said Sean Gelles, director of payments

intelligence at J.D. Power. "Regardless of which debit card a

consumer has funding their purchases, as long as they use Apple

Pay, it's Apple ( AAPL ) that owns the experience."

Gelles added that if Apple's ( AAPL ) new portfolio of BNPL

products are delivered via Apple Pay there would be "minimal

risk for Apple ( AAPL ) as they will thereby retain the relationship with

the customer."

While Apple ( AAPL ) could choose to partner with additional BNPL

providers in the future -- such as Affirm rival Klarna -- a

source familiar with the matter highlighted Affirm's technology

and underwriting expertise, as well as the company's choice to

not charge users late fees.

Klarna declined to comment.

Shares in Affirm were last down 0.7% on the day, a move that

one analyst chalked up to weaker-than-expected retail sales data

in May.