According to Bloomberg and CNBC reports, though Apple is not legally a bank, Apple will handle the lending for its new buy now, pay later (BNPL) program. Apple Financing LLC, the company’s subsidiary, is apparently licensed to provide financial services and will operate independently of Apple’s core business. Apple announced Pay Later at its annual Worldwide Developers Conference (WWDC). Users will be able to make an Apple Pay purchase and then pay it back in four equal installments over the period of six weeks, interest free.
This isn’t Apple’s first excursion into banking, but it is the first time it is taking on financial duties such as credit checks and loans, according to Bloomberg. Goldman Sachs currently handles these financial tasks for Apple’s Apple Card credit card, with the financial company playing a lesser but crucial role in Apple’s new Pay Later service. To use Pay Later, people will need to use Apple’s Mastercard-based credit card, which is issued by Goldman Sachs. In a statement, Goldman said it was “excited about our partnership with Apple, which will only continue to grow.”
According to CNBC, when a person applies for Apple’s Pay Later Service, the company will do light credit checks. According to the site, Apple will not give further credit to users who miss payments, and missing payments will not affect a user’s overall credit score because Apple will not record missed payments to credit bureaus but will restrict access to further short-term credit. Apple hasn’t said how much users will be able to spend, but CNBC estimates that Apple Pay Later will have a $1,000 limit. Apple said its decision to go it alone was in part taken to avoid sharing personal data with third parties.