The New Apple 'Buy Now, Pay Later' Service Will Scrutinize Customer History

Apple Inc. is establishing guidelines for how it will authorize transactions as part of its push into lending with a "buy now, pay later" service. If you've historically been a good customer is one important consideration.

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The Apple Pay Later service, which was introduced last year but is still under testing, will assess borrowers based on their purchasing patterns and even which Apple devices they now own. The service, which enables users to make purchases and spread out payments over time, will also check to see if users have applied for an Apple Card credit card and any other cards they have linked to their Apple Pay accounts.

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The product is a part of a larger initiative to enter the financial services market, which is considered as a significant growth opportunity for the internet giant but also one that has risks. The Pay Later service is already going behind schedule; it was first anticipated for last year. The business is also developing an indigenous financial product infrastructure to lessen its dependency on banking partners.

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Over the past ten years, Apple's services revenue has increased.

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Pushing finance is an element of going beyond hardware and software

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The financing requirements were made public as part of a service trial with Apple staff members, who can now use the option for their own individual purchases. The assessments determine whether the business will lend applicants money and how much money it will authorize. Many testers have reported seeing loan approvals for amounts around $1,000.

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According to the notes in the test version of the program, Apple Pay Later loan offers expire after 30 days and applications may occasionally call for a copy of a government identification card, a full social security number, and two-step verification on an Apple account. Access to other corporate services is unaffected by the loan status with Apple Pay Later.

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Apple's spokesperson declined to comment. Apple is situated in Cupertino, California. In March of last year, Trade Algo published an article on the company's lending policy.

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After a recent slump, Apple is relying on new services to support growth. Although the company's holiday revenues were disappointing, it gave investors a promising outlook earlier this month. And this year, the shares have increased by 18%.

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Apple will be able to use its vast customer database, which includes information on purchases made in company stores, App Store transactions, and peer-to-peer payment services like Apple Cash, through the new service. The introduction of the Apple Card in 2019 and Apple Pay, a mobile payment service that was introduced in 2014, have brought the corporation and its customers' financial lives even closer together.

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The iPhone's Wallet app includes a Pay Later feature that enables consumers to spread out an Apple Pay purchase among four payments over the course of the following six weeks. Similar to the Spending Power feature for American Express cards, clients are prompted for a loan amount when they join up, and the system responds with an approved total.

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This solution is a first for the business, which is now managing lending on its own internal payment infrastructure. For the purpose of handling applications, funding, and credit approvals, Apple established a company called Apple Financing LLC. Nevertheless, MasterCard Inc. is the provider of the payment network, and Apple Card partner Goldman Sachs Group Inc. is the issuing bank.

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Transaction records are kept with MasterCard and Apple's financing company, Goldman Sachs, according to Apple Pay Later paperwork, but not with Apple directly due to privacy concerns.

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The test was made available to thousands of store employees earlier this month, and now the business is getting ready to introduce Apple Pay in the upcoming weeks. Apple has been testing the concept with corporate personnel for a few weeks prior to its rollout to retail staff.