Apple to handle lending itself with new buy now, pay later offering, report says

Apple, which announced its entry into the growing buy now, pay later (BNPL) industry this week at the Worldwide Developers Conference in Cupertino, California, said it will handle lending and credit check services through its wholly-owned subsidiary, a report said.

The new business, Apple Financing LLC, has the required state lending permits to offer the services and it will operate separately from the main Apple corporation, Bloomberg reported.

The new feature called Apple Pay Later will be built into Apple Wallet and comes with the iOS 16 iPhone operating system, which will be released later this year.

It will be the first time the company will handle financial services such as loans, risk management and credit assessments on its own.

Thus far, the company’s financial offerings have been supported by third-party credit processors and banks. For example, the Apple Card credit card is backed by Goldman Sachs for lending and credit assessment.

“Apple Pay Later provides users in the US with a seamless and secure way to split the cost of an Apple Pay purchase into four equal payments spread over six weeks, with zero interest and no fees of any kind,” Apple said on Monday.

The new service aims to make it easier for users to “view, track, and repay Apple Pay Later payments within Wallet”.

“Users can apply for Apple Pay Later when they are checking out with Apple Pay, or in Wallet. It is available everywhere Apple Pay is accepted online or in-app, using the MasterCard network,” it said

For now, it appears that only Apple users in the US will be able to use Apple Pay Later. It is not known if the service will be made available for Apple customers in the UAE.

The BNPL business model, which allows consumers to make online purchases and spread out interest-free repayments, has become more popular during the coronavirus pandemic.

Global BNPL transaction values stood at $120 billion in 2021 and were set to grow to $576bn by 2026, data analytics company GlobalData reported.

BNPL accounted for 2.3 per cent of the global e-commerce market. In other words, for every $100 spent, $2 went towards a BNPL transaction, the report found.

Apple will run a soft credit check to ensure that borrowers can pay back the loans, which are expected to be capped at about $1,000, within the stipulated deadline, CNBC reported.