Apple takes credit for its Pay Later service

Apple CEO Tim Cook poses for a portrait next to a row of new MacBook Airs as he enters the Steve Jobs Theater during the Apple Worldwide Developers Conference (WWDC) at the Apple Park campus on June 6, 2022 in Cupertino, California.

Chris Tuite | AFP | Getty Images

A wholly owned subsidiary of Apple will check users’ credit scores and provide users with short-term credit for Apple Pay Later, the tech giant said.

The new credit service, which will compete with similar offerings from Affirm and PayPal, was announced Monday during Apple’s developer conference. Later this year, when the company’s new iOS 16 iPhone software is released, users will be able to buy products with Apple Pay and pay the balance in four equal payments over a six-week period as a BNPL (Buy Now, Pay Later) service .

Apple has partnered with Mastercard, which interacts with providers and offers a white-label BNPL product called Installment, which Apple uses. Apple Card issuer Goldman Sachs is also involved as the technical issuer of the loans and is the official BIN sponsor, the company said. However, Apple does not use Goldman’s lending decisions or its balance sheet to make the loans.

The behind-the-scenes structure of Apple’s new lending service, and the fact that it handles lending decisions, credit assessments and lending, demonstrates the iPhone giant’s strategy of bringing the framework and infrastructure for its financial services internally as much as possible.

Apple has increasingly infiltrated the fintech industry through its wallet app and financial services focused on making its iPhone more valuable and useful to users, who will tend to continue buying Apple hardware, which is the iPhone’s main source of revenue company remains.

Apple Pay Later credits probably won’t be material for Apple in the near term, but suggest the company could use its amazing balance sheet to offer more financial services in the future. Apple reported revenue of $378.55 billion in 2021.

Apple Pay later

Courtesy: Apple Inc.

Apple will conduct a soft credit check to ensure borrowers are able to repay the loans, which are expected to be capped at about $1,000, the company said. If Apple Pay Later loans are not repaid, Apple will no longer renew those user loans. However, the company said it will not report the missed payments to credit bureaus.

Apple will initially introduce Pay Later in the United States. Apple Card, the other credit name, is currently only available in the US

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