Apple’s handling of Apple Pay Later is more than just setting up a subsidiary, the financial service is said to use customers’ Apple IDs and associated data to minimize opportunities for fraud and loss. Most financial firms that offer “buy now, pay later” services use third-party credit reports to judge whether it has the ability to extend credit to new and existing customers. But as Apple moves into the space, the iPhone maker will have a different approach.
For Apple Pay Later, a subsidiary called Apple Financing LLC has been formed, giving Apple more direct control over the service. However, as a wholly-owned subsidiary, Apple is also able to provide the subsidiary with information that it may not necessarily provide to third parties, such as its existing relationship with Goldman Sachs on the Apple Card.
People familiar with the plan told The Wall Street Journal that Apple Pay Later will leverage Apple’s own platform in a number of ways, in addition to the traditional credit system. This will include using historical data from one’s own Apple ID to verify a user’s identity, as well as prevent fraud.
Applicants with Apple IDs who have been in good standing for a long time and there doesn’t appear to be any indication that they are committing fraud will be more likely to be accepted to use the service.
By doing its own checks using data it directly manages, Apple is confident enough to be a lender and no longer has to follow the arrangements of third-party companies. When Apple created the Apple Card, it was concerned about the reputational risk of being a lender, so it chose to partner with Goldman Sachs, according to sources.
Now, years later, Apple is said to be more comfortable with the prospect now, especially since the transactions it will be processing are relatively low-value and short-lasting, while also including a $1,000 payment plan cap, although the final amount Will still depends on the usual credit checks.
Customers will also be required to link their debit card to the account and payments will be automatically debited from their bank account every two weeks unless the customer opts out.
If you like our news and you want to be the first to get notifications of the latest news, then follow us on Twitter and Facebook page and join our Telegram channel. Also, you can follow us on Google News for regular updates.