Apple Using In-House Lending for New Apple Pay Later Feature
With Apple Pay Later, Apple Pay users can choose to make four payments spread over a six week period instead of paying up front. The Apple Pay Later feature includes no interest or fees so long as customers make the four payments within the allowed period.
Apple has partnered with Goldman Sachs and other companies for past financial ventures, but according to Bloomberg, Apple plans to take on the lending for the Apple Pay Later feature. Apple has launched a subsidiary, Apple Financing LLC, to handle credit checks and make decisions on loans for the service.
Apple Financing LLC operates separately from Apple, and as Bloomberg notes, this is the first time that Apple has opted to deal with financing itself. Goldman Sachs still has a role in the program, however, as it issues the Mastercard payment credential used to complete Apple Pay Later purchases as Apple Financing doesn't have a bank charter.
Bloomberg back in March said that Apple was working on a multiyear plan to bring its financial services in house, cutting out the need for partners like Goldman Sachs. Apple is working on 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. The Apple Pay Later feature is its first effort, but Apple may also use Apple Financial to handle other future services like the hardware subscription service that is in the works.
Apple Pay Later has been in development for more than a year, and it is similar to PayPal's Buy Now, Pay Later feature that also allows for payments broken down into installments. At the current time, Apple Pay Later is limited to the United States.