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Apple is deepening its funding to Buy Now, pay later with the offer

Apple Inc.

AAPL – 3.86%

It started financing with Apple Pay and the credit card it launched three years ago with Goldman Sachs Group Inc.

Now everything is getting into it.

The tech giant is launching a purchase this year, which will be paid for later in the U.S., which will allow consumers who buy with Apple Pay to split their purchases into two payments every two weeks. Apple will guarantee and finance the loans, which also means absorbing losses when the loans are not repaid. An Apple subsidiary has obtained loan licenses in most states to offer new payment plans, called Apple Pay Later.

Large technology companies have long seen finance as a way to deepen customer relationships. But most have taken on banking and financial technology partners to analyze customers and deal with a set of regulations on financial products.

Apple is doing things differently this time around, believing that it has the data and technology it needs to support its customers, according to people who know the subject. Like a bank, technology giants will rely on credit reports and FICO scores to verify the financial condition of applicants. But it also plans to use its huge Apple ID data store to verify identity and prevent fraud, people said.

Buy Now, Pay Later The company unveiled a new Apple Pay feature on Monday at the World Developers Conference.


Photo:

Via APPLE INC./REUTERS

The move is a big change for Apple, which until a couple of years ago was reluctant to become a lender. The company’s concern, including that of CEO Tim Cook, was a potential reputational risk, according to people familiar with the matter. When it was ready to launch a new credit card a few years ago, Apple touched on Goldman to accept applicants and finance loans.

The company now feels comfortable becoming a lender, in part because of the small amount of dollars and the short duration of its payment plans, according to people who know the subject. Payment plans for each transaction will be a maximum of $ 1,000, and the amount accepted by consumers will depend on their credit reports and scores.

Apple will also take into account its information about millions of customers to verify their identity and prevent fraud, people said. Applicants who have had Apple IDs in good condition for a long time and show no signs of fraud are more likely to gain acceptance.

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Apple said it would ask consumers to link the debit card to the purchase now, a later payment service. Payments will be automatically deducted from their bank accounts every two weeks unless the consumer refuses. The company said it designed the service “with the financial health of its users in mind.”

Apple’s experience with its credit card has been instrumental in convincing executives that some consumers who may use credit cards prefer not to carry interest charges or debts for long periods of time, according to people who know the subject. If you buy it now, pay for the service later, you will not be charged any interest or late fees.

Apple is connecting with merchants through Mastercard Inc.

net. Goldman is acting as a sponsor, essentially issuing a 16-digit card number that merchants will receive when they pay using the service.

“We look forward to continuing to grow our work together through another innovative product that helps consumers lead healthy financial lives, and we are excited about this latest expansion of our relationship,” a Goldman spokesman said.

Write AnnaMaria Andriotis at annamaria.andriotis@wsj.com

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Apple is deepening its funding to Buy Now, pay later with the offer

Source link Apple is deepening its funding to Buy Now, pay later with the offer

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