Apple Joins the Buy Now, Pay Later Bandwagon, But It Will Handle Lending Itself
There’s a huge trend toward the “buy now, pay later” payment scheme these days that most high-risk merchant accounts are already offering the service.
Of course, tech giant Apple didn’t want to be left behind and has recently announced that it will soon be offering a “buy now, pay later” service.
But unlike other businesses that have partnered with financial firms for this payment scheme, Apple stated that it will handle all the lending itself, its first major step towards exploring the financial services industry.
Apple Pay Later
Apple is no stranger to offering financial services like its Apple Card credit card, but it has always relied on third-party credit processors and banks for the “financial” part of these solutions.
For instance, Goldman Sachs Group Inc. has been in charge of lending and credit assessment of the Apple Card.
Although the bank still has a role to play in the new Apply Pay Later service, Apple’s wholly-owned subsidiary, Apple Financing LLC, will handle most of the bigger financial tasks including credit checks and major decisions for loans under the Apple Pay Later payment scheme.
The company, although new, has all the state lending licenses to offer this solution, although it operates as a separate entity from the main Apple Corporation. Goldman Sachs will still be the company’s bank charter since Apple Financing doesn’t have its own yet.
The Breakout Project
Apple has long expressed an interest in exploring the financial services industry. The firm has been working silently to move different elements of its financial services in-house, a secret initiative known as “Breakout.”
However, this is the first major step toward the company’s aim to become more self-sufficient when it comes to its financial services.
The Future of Apply Financing
The recently announced Apple Pay Later service at the company’s Worldwide Developers Conference is just the first step toward offering more financial services in the future and being an independent company in this area. This will separate Apple from the rest of the pack and it will also mark the company’s huge growth that started just by selling computers.
Apple Pay Later isn’t a huge risk for the company since transactions will be capped depending on the assessment of the user’s credit history.
The firm is also working on creating its own payment processing engine to replace CoreCard and it’s eventually planning to introduce a long-term “buy now, pay later” scheme called Apple Pay Monthly Installments among other financial-related services in the pipeline.
So, if you’re an avid Apple user, these steps will surely become beneficial in the future when Apple handles everything in-house and you won’t need to move from one firm to the other for disputes, refunds, and other concerns.