Apple Inc. (NASDAQ:AAPL) is planning to start an iPhone trade-in program by the end of this month, people familiar with the plans told Peter Burrows of Bloomberg. Apple Inc. (NASDAQ:AAPL) will entice users in the United States to upgrade to iPhone 5. Burrows said the iPhone maker expects to boost sales of iPhone 5, and sell older models overseas to expand business at the same time.

apple logo

Apple Inc. (NASDAQ:AAPL) has partnered with Brightstar Corporation to handle the exchange program. Brightstar Corp. already handles trade-ins for T-Mobile US Inc. (NYSE:TMUS), AT&T Inc. (NYSE:T) and many other smartphone makers and carriers. There is a huge demand for refurbished iPhone 4 and iPhone 4S models in emerging markets. Apple Inc. (NASDAQ:AAPL) iPhone is an iconic brand, which everybody wants to own.

Apple Inc. (NASDAQ:AAPL) spokeswoman Amy Bessette and Brightstar Corp. spokesman Patrick Foarde both declined to comment. Gazelle Inc. CEO Israel Ganot estimates that about 20 percent of total smartphone sales in the U.S. this year will be through trade-ins. The figure was 11 percent in 2011. So far, Apple Inc. (NASDAQ:AAPL) has paid little attention to refurbished iPhones. But the company’s growth has slowed over the past few months, so the iPhone maker might explore this market to boost sales.

Apple’s Refurbished iPhones

Companies use trade-in programs to increase sales of new devices in mature markets like the United States, where most prospective customers already have smartphones. Sources told Bloomberg that used iPhones collected through trade-ins in the United States will be resold only in emerging markets. That will help Apple Inc. (NASDAQ:AAPL) because demand for cheap devices is greater in emerging markets.

Apple Inc. (NASDAQ:AAPL) already runs an online recycling service in collaboration with PowerOn Services Inc, where it offers to pay customers for their used Macs, iPhones and iPads. The latest program will be managed in collaboration with Brightstar, and will be available only at Apple Inc. (NASDAQ:AAPL)’s retail stores. This way, customers don’t have to go through the hassle of shipping their old smartphones, and they will be paid instantly.

Miami-based Brightstar forayed into trade-in business last year. It has purchased and resold over 15 million gadgets this year, according to Bela Lainck, the head of Brightstar’s trade-in business. More than 80 percent of used devices are collected in the United States, then resold in 50 countries through various distribution centers.

Apple Inc. (NASDAQ:AAPL) shares were down 1.65 percent to $437.42 at 3:22 PM EDT.