According to Bloomberg and CNBC, Apple will take over the credit for its new “buy now, pay later” (BNPL) service and does not plan to transfer that responsibility to the financial service. Apple subsidiary LLC is reportedly licensed to provide credit services and will remain separate from Apple’s core business.

Apple announced its BNPL Pay Later service at its annual World Developers Conference (WWDC) on Monday. The service will allow users to purchase via Apple Pay and then pay that amount interest-free in four equal installments over six weeks.

This isn’t Apple’s first attempt at financing, but it’s the first time it has made financial commitments, including credit checks and lending, according to Bloomberg. It’s currently working with Goldman Sachs to handle these tasks for Apple Card, and the financial firm is playing a smaller but minor role in the new Apple Pay Later service. People will have to use Apple’s Mastercard credit card issued by Goldman Sachs to use Pay Later. Bloomberg notes that Apple Financing does not have its own banking charter (so no, technically and legally Apple is not a bank).

According to CNBC, Apple will run soft credit checks when someone applies for the “Pay Later” service. The publication also says that Apple will not provide additional credit to users who miss payments and will not be included in the user’s overall credit score – Apple will reportedly not report missed payments to the credit bureau. It’s unclear how much Apple will allow users to spend, but CNBC estimates Apple Pay Later will have a cap of around $1,000. We also don’t know if Apple will charge fees for late payments, and the company didn’t immediately respond to The Verge’s request for comment.

Apple’s desire to unite financial services, albeit separate, under one roof points to potentially tougher pressure on the financial industry in the future. It also points to the broader goal of keeping users in their ecosystem. Since Apple has introduced a new “Pay Later” service with card access and Apple Pay, you’re limited to owning and storing your iPhone to easily use most of its features. Customers in the United States first, followed by other countries, are scheduled to pay later.

BNPL services have been criticized for the potential risk they pose to consumers, and Apple Pay Later is no exception. Customers using these services are more likely to have overdrafts and many are trying to repay their loans. The existence of BNPL services such as Klarna, Affirm and Afterpay has been extensively scrutinized by government regulators for potential risks to consumers. Source