Apple reportedly dropped a plan to offer the iPhone to customers as a monthly subscription. It would have allowed customers to pay for handsets as though they were a magazine or software, and upgrade annually.
Those feeling disappointed by the news likely aren‘t aware that Apple already offers a very similar payment plan.
New iPhone payment subscription plan gets canceled
The large upfront cost of most iPhones becomes a barrier for some people. Even the entry-level iPhone SE costs $429, and scraping up that much as a lump sum can prove challenging. So Apple dreamed up a plan to collect monthly fees from customers, rather than demanding the full cost for the iPhone up front.
That sounds very close to the existing iPhone Upgrade Program, but Apple dreamed up a fresh twist capable of making the company more money. However, this never came to fruition — and Apple apparently dropped the plan.
“The idea was to make owning an iPhone like subscribing to an app — with consumers paying monthly fees and getting new phones each year — but Apple recently wound down the effort,” Bloomberg reported Wednesday.
The effort had been ongoing since at least 2022, but Apple decided the potential reward wasn’t worth the effort. There were concerns about oversight by the Consumer Financial Protection Bureau, a federal government agency that works to ensure U.S. consumers are treated fairly when making loans.
So this iPhone subscription plan got axed before it ever launched. “The team was disbanded and reassigned to other projects,” according to Bloomberg.
Consider the iPhone Upgrade Program instead
Anyone part of the long-running iPhone Upgrade Program could well be feeling confused right now. And maybe worried. The iPhone subscription program that just got canceled sounds like something they already enjoy. They pay a monthly fee for their handset and can upgrade to a new one each year.
While the programs sound very similar, there’s a crucial difference. The current iPhone Upgrade Program uses loans from Citizens Bank NA. In contrast, the loans for the now-canceled program would have come from Apple itself.
If that seems like splitting hairs, consider that when someone gets a new device from the iPhone Upgrade Program, Apple gets its money immediately from the bank making the loan. The consumer then pays back the bank each month in installments. The intent of the defunct program was that the profits Citizens Bank NA currently earns would have gone to Cupertino instead. Customers might not care, but Apple sure does.
Had the iPhone subscription program become real, Apple would have replaced the iPhone Upgrade Program with it. As it stands now, that isn’t going to happen. Which means the Consumer Financial Protection Bureau will keep its eye on Citizens Bank NA instead of Apple.
