Bloomberg and CNBC say that Apple will not hire a bank to handle the lending for its “buy now, pay later” (BNPL) program. Reports say that Apple Financing LLC will stay separate from Apple’s main business.
On Monday, at WWDC, Apple showed off Pay Later. With this feature, Apple Pay users can pay for purchases over a period of six weeks in four equal payments with no interest.
Apple has never been responsible for the money
Bloomberg says that Apple has tried its hand at banking before. This is the first time it’s doing credit checks and loans. It currently works with Goldman Sachs to handle these tasks for its Apple Card credit card, and the company also has a smaller but still important role in Apple’s new Pay Later service. Pay Later requires Apple’s Mastercard, which has issued by Goldman Sachs. Bloomberg points out that Apple Financing doesn’t have its own bank charter, which means that Apple is not a bank.
CNBC says that Apple will do light credit checks on Pay Later applicants. Apple won’t give credit to users who don’t make payments on time, and the site says that missed payments won’t hurt a user’s credit score. CNBC says that the most you can pay with Apple Pay Later is $1,000. When The Verge asked Apple about late fees for payments that weren’t made on time. The company didn’t answer right away. It’s bad business to pay later.
Apple’s plan to combine banking services is a sign that it may move into finance in the future. It shows that the company wants to keep people in its ecosystem. Apple Pay lets you use the Apple Card and Pay Later service. You need an iPhone to use most of its features. Pay Later will first be available in the US, then in other places.
Pay Later from Apple has been criticized because it puts users at risk. Many people who use these services go over their limits and have trouble paying back loans. Government regulators are looking at BNPL companies like Klarna, Affirm, and Afterpay to see if they pose any risks to customers.