Apple Ditching Banking Partners in BNPL Scheme

Instead of having a banking partner like other buy now, pay later (BNPL) programs, Apple is going rouge and is handling the lending itself through its wholly-owned subsidiary Apple Financing, which will oversee credit checks and make decisions.

Apple Pay Later was one of several announcements the company made at its Worldwide Developers Conference (WWDC) on Monday (June 6). Its new BNPL product enables Apple Pay and Apple Wallet users to split four installment payments across six weeks. The program is initially launching in the U.S.

See also: Apple Says Now Is the Time for Pay Later 

In the past, Apple has partnered with Goldman Sachs and Barclays for its financial products, and while the Silicon Valley tech company still has ties with those banks, their roles are smaller, Financial Times reported late Wednesday (June 8).

Goldman’s role in Apple Pay Later is enabling Apple to access the Mastercard Network, something the iPhone maker can’t do on its own since it lacks the necessary license to issue payment credentials, per FT. Apple is managing the underwriting and lending via its subsidiary Apple Financing. 

Read more: How BNPL Upended Nearly a Century of Installment Payments

The BNPL market was valued at $125 billion last year and by the end of the decade it could hit an estimated $3.3 trillion, PYMNTS reported last month. 

With Apple maintaining control, the company will earn interchange fees from each transaction, control the data, and introduce its financial products globally. Apple Card is still only available in the U.S.  

While Apple will be lending off its own balance sheet, the company is flush with cash. Its most recent quarterly results at the end of March showed a net cash balance of $73 billion. Apple also posted a profit of $95 billion in the latest fiscal year. 

Related: Are There Clouds on the BNPL Horizon?

Apple Pay rolled out in 2014 and enables iPhone and Apple Watch users to use Apple’s wallet app to store debit and credit cards for payments. 

Apple told FT that it doesn’t think it needs a banking license right now. The tech giant said one reason it’s keeping control in its court is to sidestep sharing users’ personal data with third parties.