Earlier this week, at the Worldwide Developers Conference, Apple announced its entry into the booming buy now, pay later (BNPL) business by stating that it will handle loan and credit check services through its wholly owned subsidiary, according to a report.
As reported by Bloomberg, in order to provide these services, Apple Financing LLC, a newly formed company, has obtained the necessary state financing permits and will operate independently of the main Apple firm.
When iOS 16 is launched later this year, it will include a new feature dubbed “Apple Pay Later,” which will be integrated into Apple Wallet.
Cupertino-based Apple will be handling financial services including loans, risk management, and credit assessments on its own for the first time.
Banks and other third-party credit processors have so far provided support for the company’s various financial product and service offerings. For instance, Goldman Sachs is behind the lending and credit evaluation processes for customers of the Apple Card credit card.
Apple stated on Monday, when they announced the new service, that “Apple Pay Later provides users in the US with a smooth and secure option to split the amount of an Apple Pay purchase into four equal payments spread over six weeks, with zero interest and no fees of any sort.”
In order to make it easier for consumers to “see, track, and reimburse Apple Pay Later payments within Wallet,” the new service has launched.
“Apple Pay Later can be applied to when using Apple Pay or in Wallet.” Using the MasterCard network, it may be used “wherever Apple Pay is accepted online or in-app,” it said.
For the time being, it looks like Apple Pay Later will only be available to customers in the United States. Apple customers in the United Arab Emirates may or may not be able to use the service.
The coronavirus epidemic has made the BNPL business model, which allows customers to make online purchases and disburse interest-free repayments, more popular.
In 2021, the global BNPL transaction value was $120 billion and was expected to rise to $576 billion by 2026, according to data analytics company GlobalData.
In terms of global e-commerce sales, BNPL accounted for 2.3% of the total. So, for every $100 paid, the study discovered that $2 went to support BNPL transactions.
CNBC reports that Apple will do a mild credit check to guarantee that borrowers can pay back the loans, which are believed to be capped at $1,000, within the set deadline.