Apple wants to use its own balance sheet to finance deferred loans

A smartphone with the Apple Pay logo is placed on a laptop in this July 14, 2021 illustration. REUTERS/Dado Ruvic/Illustratio

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June 8 (Reuters) – Apple Inc (AAPL.O) plans to use its corporate balance sheet to fund loans for its upcoming Apple Pay Later service, the company said on Wednesday.

Apple said its treasury department will decide the exact mechanism it will use to fund the loans, and funding sources may shift over time. Loans and credit rating decisions are processed by a wholly owned subsidiary, Apple Financing LLC.

Apple announced the Pay Later service this week, offering to split purchases over six weeks into four equal payments. The service will be launched later this year alongside Apple’s latest operating systems for iPhones and iPads and will compete with existing buy-now-pay-later firms such as Affirm Holdings Inc (AFRM.O) and Block Inc’s (SQ.N ) Additional payment.

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Apple’s pay later loans have no interest and no fees. To assess creditworthiness, Apple plans to use soft retrieval of a customer’s creditworthiness and other data, such as credit history, both in its stores and online services such as the App Store. B. the customer’s purchase and payment history with Apple.

To use the Pay Later service, Apple customers must connect a debit card to their Apple Pay account to fund loan repayments. A quarter of the purchase price for approved credit is due at the time of purchase, and like other debit card transactions, Apple conducts an immediate check to ensure there are sufficient funds to cover the prepayment.

Apple offers the credits wherever Apple Pay is accepted, both online and in physical retail stores. Payments to merchants are processed through the MasterCard (MA.N) network via proof of payment issued by Goldman Sachs Group Inc (GS.N), Apple said.

Apple Financing LLC has credit licenses in all US states that allow such pay later services, it added.

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Reporting by Stephen Nellis; Adaptation by Richard Pullin

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