Apple is working on a multiyear plan to bring its financial services in-house in the future, cutting down on the need for financial partners like Goldman Sachs, reports Bloomberg.
Apple is developing payment processing technology and infrastructure such as lending risk assessment, fraud analysis, credit checks, and dispute handling, plus it is working on tools for calculating interest, rewards, approving transactions, reporting data to credit bureaus, increasing credit limits, and more. Part of this project is called "Breakout" internally, as it would see Apple moving away from the current financial systems that it uses.
At the current time, Apple works with Goldman Sachs Bank and CoreCard for the Apple Card, Green Dot for Apple Cash, and Citizens Bank for the iPhone Upgrade Program, but Bloomberg says Apple's work on financial services would be aimed at future products rather than its current products.
Apple already has Apple Pay and Apple Card, plus it is developing a future subscription service for hardware and a "buy now, pay later" option for Apple Pay transactions.
The "buy now, pay later" feature, which is called "Apple Pay Later" internally, is expected to be the first product to use Apple's new system. There will be an option for a four-payment Apple Pay purchase called "Apple Pay in 4," and an option for long-term payment plans through "Apple Pay Monthly Installments." The Apple Pay in 4 feature could use Apple's in-house payment processing, while the longer term financing would be handled by Goldman Sachs.
In the future, Apple could also use its new system for the hardware subscription plan that it has in the works, plus it could serve as lender for more "buy now, pay later" services. To start with, Apple could limit risk by requiring customers to use debit cards, plus its in-house risk assessment tools could take into account Apple purchase history and factors like whether a credit card attached to the App Store has been declined to determine whether a customer can use the payment services.
According to Bloomberg, Apple has faced some "hurdles" building its financial services product, so there is a chance that it could end up delaying its plans, or could continue to work with partners, though this is a "very unlikely scenario."
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Apple customer support, on the other hand, has always been excellent. I think bringing this in-house is a good move.
So, my guess is that Apple is working to decrease its reliance on outside providers for some support tasks, such as reporting data to credit bureaus or loss prevention, but we shouldn't hold our breath for an entirely Apple owned and operated :apple:Bank or :apple:Trades.
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ETA: Goldman Sachs may not add much to :apple:Card from a customer service perspective but it does bring two very important things to the the table from Apple's point of view: a fully chartered bank and access to massive amounts of capital. Apple's balance sheet, and consequently its stock price, would look very different if Apple internally funded and operated the :apple:Card. This is due to both regulatory requirements and to the huge number of :apple:Card credit lines. In addition, Apple may have had a lot of leverage with GS because Marcus, GS's retail bank, was launching right around the same time as :apple:Card. GS, in order to jump start Marcus–and to potentially help its investment bank get Apple business–may have given Apple very favorable terms.
*drum roll*
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