Apple has its fingers in many pies, and it looks like the company cut itself a bigger piece of the financial services pie with the “Apple Pay Later” feature it announced at the Worldwide Developers Conference (WWDC) on Monday.
According to a report from Bloomberg‘s Mark Gurman, Apple will handle the lending for its “buy now, pay later” service entirely on its own. The feature is only available in the U.S. and not Canada.
The Cupertino, California-based tech giant has set up a wholly owned subsidiary — Apple Financing LLC — to take care of credit checks and make decisions on loans for the new service. Apple Financing has all the required state lending licenses for a “buy now, pay later” business model, but the subsidiary operates independently of Apple, the company said.
Up until now, Apple has relied on third-party credit processors and banks for financial services. The Apple Card credit card, for example, is backed by Goldman Sachs’ lending and credit assessment.
However, Apple Pay Later is vertically integrated, with Goldman Sachs retaining a minor role in the service as the issuer of the Mastercard payment credential used to complete purchases through the program. Apple’s new financing company does not have its own bank charter.
Apple is also working on bringing other aspects of its financial services in-house. The company eventually plans to transition to its own payment processing engine and introduce fraud detection, several new customer-service features, and more.
Apple Pay Later lets users divvy up the cost of an Apple Pay purchase into four equal payments to be paid over six weeks. The service boasts zero interest and no fees of any kind.
Apple Pay Later will come built into Apple Wallet and will start rolling out as part of iOS 16 later this fall. The service will only be available in the U.S. at first, but Apple wants to eventually expand the program to more regions. There is no word yet on when Apple Pay Later can be expected to hit Canada.
Gurman also reported that the company is working on a “buy now, pay later” service with monthly installments, called Apple Pay Monthly Installments.
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It makes sense for Apple to do this as volume goes up, they don’t want to share any potential revenue with others.
“zero interest and no fees of any kind.” Well, there are almost certainly fees charged to the sellers. No such thing as a free lunch. And who does the cost get passed on to? You guessed it.