Apple, money lender

Apple has been working to move many elements of its financial services in-house as part of a secret initiative dubbed "Breakout."

From Mark Gurman's "Apple Will Handle Lending Itself With New Pay Later Service" posted Wednesday on the Bloomberg:

Apple will handle the lending itself for a new “buy now, pay later” offering, sidestepping partners as the tech giant pushes deeper into the financial services industry.

A wholly owned subsidiary will oversee credit checks and make decisions on loans for the service, which is called Apple Pay Later. The business -- Apple Financing LLC -- has necessary state lending licenses to offer the feature, though it operates separately from the main Apple corporation, the company said in response to Bloomberg questions.

The move marks the first time Apple is handling key financial tasks like loans, risk management and credit assessments. It’s a significant shift for a company that got its start selling computers. Until now, Apple’s financial services have been backed by third-party credit processors and banks. The Apple Card credit card, for instance, relies on Goldman Sachs Group Inc. for lending and credit assessment.

Goldman Sachs retains a smaller role in the new program. The financial firm is the issuer of the Mastercard payment credential that’s used to complete Apple Pay Later purchases. Apple Financing doesn’t have its own bank charter.

My take: If Al Pacino can play Shylock I suppose Apple can play at banking.


  1. Fred Stein said:
    There’s much more to come. The best part is that Apple can provide better guarantees of customer security and privacy, while providing financial services at lower cost, and with superior user interface.

    For international travel and transactions, Apple could cut currency exchange fees to near zero.

    Expanding Apple’s initiative for small business services to include more fintech, is a natural.

    June 9, 2022
  2. Greg Lippert said:
    I have been saying for years that Apple would eventually become a financial institution. They hired GS to help them get started and learn how to things right (and wrong), but just like with their tech eventually own the whole widget.

    June 9, 2022
  3. Dan Scropos said:
    Could this financial project culminate with the advent of the Apple Car?

    June 9, 2022
    • Darren DMW said:
      Dan, recently through my reading about Ukraine I learnt the real meaning of the word culminate in a competitive situation:

      The culminating point in military strategy is the point at which a military force is no longer able to perform its operations. On the offensive, the culminating point marks the time when the attacking force can no longer continue its advance, because of supply problems, the opposing force, or the need for rest.

      June 9, 2022
      • Jerry Doyle said:
        @Darren DMW: “…. On the offensive, the culminating point marks the time when the attacking force can no longer continue its advance, because of supply problems, the opposing force, or the need for rest.”

        Or the attacking force accomplishes its goal, which usually is victory. 🙂

        June 9, 2022
      • Kirk DeBernardi said:
        Darren D. —

        Everything arcs.

        (tip-of-the-hat to Horace Dediu)

        If what your inferring is that Apple, by culminating fintech into the “battleground” of business, is heading toward an eventual state of burden and ineffectiveness — while maybe quite some time off — you might be onto something.

        As an Apple long for quite some time now — and a big believer of Apple’s mission and a solid benefactor of its performance — my only real worry when I lay my head on the pillow at night is whether this wonderful Apple mojo will begin to crack and the great and powerful Apple then reaches the peak of its magnificent and historical arc.

        It’s happened to the best of them throughout history.

        Time will tell.

        Go 

        June 9, 2022
      • David Emery said:
        The question in military operations is whether The Other Side is capable of exploiting the opponent’s reaching the culminating point. In Ukraine, I have very serious concerns about their ability to capitalize on Russia’s weakness. Fortunately, with Apple I don’t have a lot of concern about their ability to capitalize on opponent weakness. (In business, it’s a combination of managerial flexibility and financial resources to pivot the business. The great example for this is Microsoft’s move away from Windows-uber-alles to their more cloud-based initiatives.)

        June 9, 2022
  4. Jerry Doyle said:
    Apple has a billion plus users. Eventually owning its own financial services affords Apple the conduit for capturing the financial services associated with purchases and credit extension for added revenues. Apple keeps the merchants fees along with any financing charges associated with the sale. The consumer benefits through one-stop shopping and more competitive financing.

    I am confident that “Breakout” is a start to one-stop shopping with Apple where the consumer purchases Apple goods and services, secures financing as needed, adds protection care and acquires auto insurance to go along with the Apple Car. One example, I purchase my Apple Car on-line, add Apple Car Protection, Apple Car Insurance and finance it all through Apple Pay.

    I also hope “Breakout” is the start of Apple as the one-stop financial services for all my banking and investment needs from checking account, savings, borrowing and investment through Apple brokerage services.

    Now is a propitious period for Apple to lay the seeds for developing more fully its health & wellness services where Apple becomes my health provider, health clinic, pharmaceutical service and wellness center for either on-site or at home exercise choice offerings. 🙂

    June 9, 2022

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