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Apple Established a Separate Company to Handle Pay Later Loans

More financial services are being brought in-house by the corporation.

Apple intends to handle loan choices on its own when its Pay Later service releases alongside iOS 16 later this year. According to Bloomberg, Apple has established an Apple Financing division to undertake credit checks and customer approvals. Although the new company will be independent of Apple, it has received the requisite state permits to deliver the feature.

While Apple has previously experimented in financial services, it did so with the assistance of firms such as Goldman Sachs. Apple Pay Later is still being worked on by the investment bank. According to Bloomberg, the company would offer Mastercard payment credentials for clients to use while making purchases, but it will not handle lending or credit assessments like Apple Card does now.

Apple is attempting to recreate a method that has previously worked for them. Many of the components that power the business’s computers and mobile devices have been developed in-house, and the corporation has spent a lot of time and money doing so. Apart from making Apple’s products more appealing to customers, the strategy has allowed the company to reduce its reliance on external suppliers like as Intel and potentially enhance income. Apple looks to be hoping for a similar result in the financial services sector.

Bloomberg reports that the corporation is developing its own payment processing engine as part of a program dubbed “Breakout.” It’s also working on fraud detection and interest computation tools, as well as other customer-facing services.

Apple’s drive towards subscription services, such as TV+ and Fitness+, is likely viewed as a method to keep current iPhone, iPad, and Mac consumers tethered to the company’s ecosystem.

Until now, Apple’s financial services were provided through third-party credit processors and banks. Goldman Sachs’ lending and credit assessment, for example, is backed by the Apple Card credit card.

Apple Pay Later, on the other hand, is vertically integrated, with Goldman Sachs serving as the provider of the Mastercard payment credential used to complete transactions through the platform. Apple’s new financing firm does not have its own banking license.

Other areas of Apple’s financial services are also being brought in-house. The company intends to switch to its own payment processing engine in the future, as well as add fraud detection, additional customer-service tools, and other features.

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