IShop in the supermarket, electronics store or on the Internet, but do not pay immediately, but pay off the purchase in four installments over six weeks – there are many “buy now, pay later” offers like this one. So far, however, there has almost always been a bank or payment service provider behind it: Klarna, Paypal or Afterpay are examples of this. Now, for the first time, a tech company is entering the installment payment business itself.
Apple announced on Monday at its WWDC developer conference that it would be expanding its own Apple Pay payment service to include a corresponding installment payment function. On Thursday night, the iPhone group made it clear: The offer will be financed out of its own pocket and handled by a wholly owned subsidiary: Apple Financing LLC. Without a bank and without a payment service provider in between.
As with other providers, customers do not have to pay interest or fees for the loans. The Apple subsidiary is to check the creditworthiness of the customers and grant the loans on this basis. The company has the necessary government credit licenses to offer the feature, Apple told Bloomberg news agency. It operates separately from the main company Apple.
Apple uses its platform advantage
With this move, Apple is taking on financial functions such as loans, risk management and credit checks for the first time. For a company that just started selling computers, this is a significant change. His previous partners remain on board, but their role is reduced.
Apple has teamed up with Mastercard and uses an installment payment solution provided by the credit card company for Pay Later. The major US bank Goldman Sachs, issuer of the existing Apple credit card, technically issues the loans and is also behind the Mastercard payment authorization. Apple Financing does not have its own banking license. However, Apple does not use Goldman’s credit check and the money lent comes from Apple itself.
With the offer of its own installment service, Apple is attacking the aforementioned competitors head-on. The tech company could have a good chance of taking significant market share from them, since Apple Pay is preinstalled on all iPhones, Macs and also all other computers with Apple’s Safari browsers.
As with its entry into the distribution of news with Apple News, the streaming of films and series with Apple TV+ and the streaming of music with Apple Music, Apple is once again using its platform advantage: Because the group manufactures the devices with which users access services and content, it can well position its own alternatives to news sites, Netflix and Spotify.
As the financial service Bloomberg further reports, Apple has been working for some time in a secret initiative called “Breakout” to offer more financial services itself and thus make itself more independent of the services of its previous partners. In addition to taking over lending, credit checks and making decisions about loans, Apple is therefore working on its own payment processing mechanism. The company is also working on new customer service features, fraud analysis, interest calculation tools and rewards for other services.
