Apple is launching a device leasing program with Klarna as financial backer, letting it collect sale prices upfront while Klarna carries installment risk. The program, Apple Upgrade, replaces existing iPhone financing plans and follows shelved in-house subscription efforts.
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Apple is preparing to launch a device leasing program with Klarna as its financial backer, a structural shift in how the company sells hardware without taking the credit risk itself.
The program, called Apple Upgrade, is due to launch July 28 and will support most iPhone, Mac, iPad and Apple Watch models, Bloomberg reported Tuesday, citing sources. Klarna is serving as the financial backer, meaning Apple collects the sale price upfront while Klarna carries the installment risk.
The leasing model works like a car lease. Users can pay off devices early, upgrade to newer models before the term ends, or return the device when the period is up. Apple intends to phase out its current iPhone Upgrade Program and standard financing in favor of Apple Upgrade, the report said.
Apple had been considering an in-house hardware subscription service but shelved those plans in 2024, according to Bloomberg. Teaming with Klarna gives Apple the leasing revenue stream without the balance-sheet exposure of a subscription program.
The timing follows a round of price increases across Apple's product line, driven by memory-chip costs that CEO Tim Cook told the Wall Street Journal are "unlike anything he's seen in 40 years." Cook said the company had tried to shield customers from the increases but called the situation "unsustainable."
Those price increases did not extend to the iPhone, which helped Apple avoid the sales slump that hit other smartphone makers in the second quarter. The company is widely expected to raise iPhone prices when the next model debuts in September, Bloomberg added.
Apple Upgrade is positioned as offering lower monthly payments than current financing options. For Klarna, the program marks a significant expansion into high-ticket consumer electronics – a category with different loss dynamics than the apparel and travel verticals where the Swedish fintech built its business.
PYMNTS has contacted both Apple and Klarna for comment.
For broader stock market analysis, readers can track how Apple's hardware financing strategy affects its services revenue mix and capital allocation.
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