Apple will manage loans for Apple Pay Later


Apple CEO Tim Cook poses for a portrait next to a line of new MacBook Airs as he enters the Steve Jobs Theater during the Apple Worldwide Developers Conference (WWDC) at the Apple Park campus in Cupertino, California on June 6, 2022.

Chris Tuite | AFP | Getty Images

A wholly-owned subsidiary of Apple will check users’ credit and issue short-term loans to users for the company’s upcoming short-term loan service, Apple Pay Later, Apple said.

The new service, which will compete with similar offerings from Affirm and PayPal, was announced at Apple’s developer conference on Monday. Later this year, when the company’s new iOS 16 iPhone software launches, users will be able to purchase products with Apple Pay and pay the balance in four equal installments over six weeks. It is a type of product often referred to as Buy Now Pay Later.

Apple has partnered with Mastercard, which interacts with vendors and offers a white-label BNPL product called Installments, which Apple uses. Goldman Sachs, which issues the Apple Card, is also involved as the technical issuer of the loans and official sponsor of the BIN, the company said. But Apple does not use Goldman’s credit decisions or its balance sheet to issue the loans.

The behind-the-scenes structure of Apple’s new lending product and the fact that it handles lending decisions, credit checks and lending reveals that the iPhone giant is looking to integrate the framework and infrastructure of its financial services as much in-house as possible.

Apple has increasingly entered the fintech industry, but its strategic approach to its Wallet app and financial services is to make its iPhone more valuable and useful to users so that they continue to buy. Apple hardware, which remains the company’s main source of sales.

Loans from the Apple Pay Later product are unlikely to be material to Apple in the near term, but suggest the company could use its prodigious balance sheet to offer more financial services in the future. Apple made $378.55 billion in revenue in 2021.

Apple pay later

Courtesy: Apple Inc.

Apple will perform a soft credit check to ensure borrowers are likely to repay the loans, which will likely be capped at around $1,000, the company said. If Apple Pay Later Loans are not repaid, Apple will no longer extend these users’ credit. But it won’t report missed payments to the credit bureaus.

Apple Pay Later will first launch in the United States. Apple Card, the company’s other credit product, is still US-only.


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