Apple Pay Later, Apple’s (NASDAQ:AAPL) newest Fintech service, was recently revealed rattling the cages of more established buy now – pay later (BNPL) providers. As the thesis goes, Apple will offer short-term credit (just 6 weeks – 4 payments) which will drive sales and thus more revenue for the company via exchange fees. The fact that Apple has over one billion iPhone users helps as there is no agreement needed with a merchant – the lender lives on your iPhone completely automated, people just select the Apple Pay Later service and pay over time.
Since the reveal at WWDC, more details on the credit offering have been uncovered – interestingly, Apple has created a new subsidiary Apple Financing LLC which has acquired necessary state licenses to offer the loans.
This weekend, more information emerged as to how Apple plans to mitigate its credit risk. While Apple will use established services like FICO scores it will also take advantage of its Apple ID and account information to mitigate any attempts at fraud.
Apple has created one of the most advanced authentication platforms for purchases. In using Apple Pay, an iPhone user just verifies with their face.
Apple’s Face ID is described as some of the most advanced hardware and software the company has ever created. “The TrueDepth camera captures accurate face data by projecting and analyzing thousands of invisible dots to create a depth map of your face and also captures an infrared image of your face.”
Apple claims that the probability of a random person accessing your iPhone or iPad Pro and unlock it using Face ID is “less than 1 in 1,000,000 with a single enrolled appearance whether even if you are wearing a mask. Of course, users can always use a passcode as well but, of course, that requires having the physical device in your hand.
Apple is on a mission to redefine authentication for any service and it is already a long way there in accomplishing this mission.
Apple is well known for its thoughtful approach to entering new markets and then dominating it with a superior, simpler process. Apple partnered with Goldman Sachs on their highly popular Apple Card but now they are looking to provide more Fintech services on their own. Initially, Apple will cap credit for its Apple Pay Later to $1000 but over time that amount will rise and terms will expand.
As CI has stated in the past, it is more a question of which Fintech service will be next for Apple as the company has created the software ecosystem for a growing segment of your existence, managed on your iPhone but soon on your glasses etc.