Apple said its treasury department will decide the exact
mechanism it will use to fund the loans and funding sources may shift over
time. Loans and creditworthiness decisions will be handled by a wholly owned
subsidiary, Apple Financing LLC.
Apple announced the pay-later service this week, offering to
split purchases up into four equal payments over six weeks. The service will
launch later this year along with Apple's latest operating systems for iPhone
handsets and iPad tablets and will put it into competition with existing buy-now,
pay-later firms such as Affirm Holdings and Block's Afterpay.
Apple's pay-later loans will have zero interest and no fees
of any kind. To judge creditworthiness, Apple said it plans to use a soft pull
of a customer's credit and other data, such as the customer's purchase and
payment history with Apple in both its stores and online services such as the
App Store.
To use the pay-later service, Apple customers will have to
connect a debit card to their Apple Pay account to fund repayment of the loans.
A quarter of the purchase price for approved loans will be
due at the time of purchase, and, like other debit card transactions, Apple
will run an instant check to ensure there are sufficient funds to cover the
upfront payment.
Apple will offer the loans anywhere that Apple Pay is
accepted, both online and in physical retail stores. The payments to merchants
will be made over the MasterCard network through a payment credential issued by
Goldman Sachs Group, Apple said.
Apple Financing LLC has lending licenses in all US states
where such pay-later services are allowed, it added. © Reuters
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