Apple’s fast-growing financial services are making it almost like a bank

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Apple will handle lending for its new buy now pay later (BNPL) service, and has no plans to shift that responsibility to a financial service, according to reports from Bloomberg and CNBC† The company’s subsidiary, Apple Financing LLC, is reportedly licensed to provide lending services and will remain separate from Apple’s main business.

Apple announced its BNPL service Pay Later Monday at its annual Worldwide Developers Conference (WWDC). The service allows users to make a purchase through Apple Pay and then repay that amount in four equal installments over the course of six weeks with no interest.

This isn’t Apple’s first step into finance, but, like Bloomberg notes, it is the first time it has taken on financial responsibilities, including credit checks and loans. It is currently working with Goldman Sachs to complete these tasks for its Apple Card credit card, with the financial company playing a smaller, but not insignificant, role in Apple’s new Pay Later service. People will have to use Apple’s Mastercard-based credit card issued by Goldman Sachs to use Pay Later. Bloomberg notes that Apple Financing does not have its own banking charter (so no, Apple is not technically and legally a bank).

According to CNBC, Apple will perform soft credit checks when a person requests their Pay Later service. The outlet also reports that Apple will not grant additional credit to users who miss payments, nor will they count toward a user’s overall credit score — Apple will reportedly not report missed payments to credit bureaus. It’s unclear how much Apple will let users spend, but CNBC predicts that Apple Pay Later will have a cap of around $1,000. We also don’t know if Apple will charge a late fee for missed payments, and the company did not immediately respond. The edge‘s request for comment.

Apple’s move to consolidate financial services under one, albeit separate, roof points to potentially greater pressures on finances going forward. It also signals a broader purpose of keeping users in its ecosystem. With Apple providing access to its card and the new Pay Later service from within Apple Pay, you’re pretty much stuck owning and holding your iPhone to use most of the features with ease. Pay Later is set to roll out to US customers first, before expanding to other countries later.

BNPL services have come under fire for the potential risk they pose to consumers, and Apple’s Pay Later is no exception. Customers who use these services are: more chance of being redand a lot of struggle to repay their loans. Existing BNPL services such as Klarna, Affirm and Afterpay have: come under scrutiny from government regulators about the potential risks they pose to consumers.

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