December 9, 2022

Apple Inc.

AAPL -0.11%

tiptoed into finance with Apple Pay and the credit card it launched three years ago with

Goldman Sachs Group Inc.

Now it is going all in.

The tech giant is launching a buy now, pay later offering in the U.S. later this year that will allow consumers that shop with Apple Pay to split purchases into four payments every two weeks. Apple will underwrite the loans and fund them, which also means absorbing losses when borrowers fail to repay. An Apple subsidiary has obtained lending licenses in most states to offer the new payment plans, called Apple Pay Later.

Big technology companies have long eyed finance as a way to deepen their relationships with customers. But most have tapped banking and financial-technology partners to handle the nitty-gritty of vetting customers and dealing with the raft of regulations that surround financial products.

Apple is doing things differently this time, convinced it has the data and technology it needs to approve customers without risking big losses, according to people familiar with the matter. Much like a bank, the tech giant will rely on credit reports and FICO scores to check applicants’ financial standing. But it also plans to use its giant store of Apple ID data for identity verification and fraud prevention, the people said.

Buy now, pay later is a new Apple Pay feature unveiled by the company Monday at its Worldwide Developers Conference.



The move marks a big change for Apple, which until a couple of years ago had little appetite to become a lender itself. A concern at the company, including for Chief Executive

Tim Cook,

was the 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 tapped Goldman to approve applicants and fund the loans.

The company now feels comfortable becoming a lender in part because of the small dollar amount and short duration of the payment plans, people familiar with the matter said. Payment plans per transaction will max out at $1,000, and the amount for which consumers are approved will depend on their credit reports and scores.

Apple also will factor in its own information on millions of customers for identity verification and fraud prevention, the people said. Applicants whose Apple IDs have been in good standing for a long period and who have no indication of fraud are more likely to get approved.

Apple announced dozens of new features for the next versions of iOS, iPadOS, WatchOS and MacOS in its two-hour WWDC 2022 keynote—plus a redesigned MacBook Air! WSJ’s Joanna Stern headed to Cupertino and boiled down the news for you. Photo Illustration: Adele Morgan/The Wall Street Journal


Is lending directly to consumers a good investment for Apple? Why or why not? Join the conversation below.

Apple said it would require consumers to link their debit card to its buy now, pay later service. Payments will be deducted from their bank accounts automatically every two weeks unless the consumer opts out. The company said it designed the service with “users’ financial health in mind.”

Apple’s experience with its credit card played a role in convincing executives that some consumers who can use credit cards prefer not to in order to avoid interest charges or carrying debt for a long period, according to people familiar with the matter. Apple’s buy now, pay later service won’t charge interest or late fees.

Apple is connecting to merchants through the

Mastercard Inc.

network. Goldman is serving as the sponsor, essentially issuing a 16-digit card number that merchants will receive when consumers 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 are excited about this latest expansion of our relationship,” a Goldman spokesman said.

Write to AnnaMaria Andriotis at [email protected]

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Appeared in the June 13, 2022, print edition as ‘Apple Moves Deeper Into Finance Business.’