According to a new report, Apple is working on a multi-year plan to bring its financial services in-house in the future and thus rely less on financial partners such as Goldman Sachs.
Apple is developing technology and infrastructure for payment processing, such as credit risk assessment, fraud analysis, credit scoring, and dispute handling, as well as tools for calculating interest and rewards, approving transactions, reporting data to credit bureaus, increasing credit limits, and more. Part of this project is internally called "Breakout" because it would move Apple away from the current financial systems it uses.
“Apple Pay Later” could be the first of these products
Apple currently works with Goldman Sachs Bank and CoreCard for the Apple Card, with Green Dot for Apple Cash and with Citizens Bank for the iPhone Upgrade Program. But according to Bloomberg Apple's work on financial services would relate to future products rather than current products. Apple already has Apple Pay and the Apple Card. The company is also developing a future subscription service for hardware and a "buy now, pay later" option for Apple Pay transactions. The "buy now, pay later" feature, internally called "Apple Pay Later," is expected to be the first product to use Apple's new system. There will be an option for an Apple Pay purchase with four payments, called "Apple Pay in 4," and an option for long-term payment plans through "Apple Pay Monthly Installments."
Apple has already encountered hurdles
The Apple Pay in 4 feature could use Apple's in-house payment processing while longer-term financing would be handled by Goldman Sachs. In the future, Apple could also use its new system for the hardware subscription plan it's working on, and it could serve as a lender for more buy now, pay later services. For starters, Apple could limit risk by requiring its customers to use debit cards. Additionally, its in-house risk assessment tools could consider Apple's purchase history and factors such as rejection of an App Store-linked credit card to determine whether a customer can use the payment services. According to Bloomberg, Apple has encountered some "hurdles" in developing its financial services product, so there's a chance the company could delay its plans or continue to work with partners, although that's a "very unlikely scenario." (Photo by Unsplash / blocks)
