iOS 16 buy now, pay later, Apple will provide users with Apple Pay Later short-term loans

Apple said that a wholly-owned subsidiary of the company will be responsible for checking user credit and providing short-term loans to users for Apple’s upcoming short-term loan service “Apple Pay Later“. loan.

The new service, which Apple announced at its developer conference on Monday, will compete with similar services from Affirm and PayPal. Later this year, when Apple releases the new iOS 16 iPhone software, users will be able to use the Apple Pay service to buy products and pay the remainder in 4 equal installments over 6 weeks, a “buy now, later Payment” (BNPL) service.

Apple already has a partnership with Mastercard, which interacts with the vendor and offers a white-label BNPL product called “Installments” that Apple is using. Apple said Goldman Sachs, which issued the “Apple Card,” was also a technology issuer of the loan, but Apple would not use Goldman’s credit decisions or its balance sheet to make loans.

The behind-the-scenes structure of this new loan product, combined with the fact that Apple is handling loan decisions, credit checks and loans, suggests the tech giant’s strategy is to bring its financial services framework and infrastructure in-house whenever possible.

Apple is increasingly breaking into the fintech industry with its wallet app and financial services, which are centered on making the iPhone more valuable and useful to users who will tend to keep buying Apple hardware, which remains the company’s main source of sales.

Lending for the Apple Pay Later product isn’t likely to be a big deal for Apple in the short term, but it suggests the company may use its large balance sheet to provide more financial services in the future. According to Apple’s previously released financial report, the company’s 2021 revenue will be $378.55 billion.

Apple said it will conduct so-called “soft credit checks” to ensure borrowers can afford to repay loans, which could be capped at around $1,000. If Apple Pay Later loans aren’t repaid, Apple will no longer extend credit to those users, but the company says it doesn’t report delinquent payments to credit bureaus.

Apple will initially launch Apple Pay Later in the US, and the company’s other credit card product, the Apple Card, is currently only available in the US.

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