Apple is handling the lending process for its new buy now pay later service, a risky proposition given the flagging fortunes of many players in that sector.
Apple Financing LLC, a subsidiary of the company, will handle credit checks and give loans, and has already acquired the necessary lending licenses.
Apple Pay Later allows customers to split the cost of any Apple Pay transaction over four instalments, across six weeks. The company has plans to launch a monthly version, which allows larger purchases with monthly payments.
On top of this, Apple is also working to launch its own payment processing system, which will replace CoreCard Corp.
It’s all part of a larger move, codenamed ‘Breakout’ to bring all Apple’s financial plays in-house.
But it comes with risks.
According to a report from SFgate, 73 percent of BNPL customers were born after 1997, with 43 per cent of these missing at least one payments.
A separate report from DebtHammer found 30 percent of users struggle to make payments.
Credit card companies in the US has already began considering missed BNPL payments in their credit score assessments, meaning this is just another way for young people to fall into a bad credit trap.