Apple Spins Off BNPL Unit, Quietly Plans Another Financial Initiative

Apple Inc AAPL has spun off a wholly-owned subsidiary to handle lending for its recently introduced 'buy now pay later' service.

What Happened: Apple Financing LLC has acquired state lending licenses and will function independently of Apple to facilitate the new pay later service, reported Apple Insider, citing a Bloomberg report. 

This marks Apple’s foray into incorporating loans and credit assessments and other financial businesses into the company, according to the report.

Apple has reportedly been moving financial services to a secret initiative dubbed internally as “Breakout.” A rumored subscription service that could power hardware purchases could also be underpinned by Breakout.

See Also: How To Buy Apple (AAPL) Shares

Why It Matters: Apple will rely on two streams of cash flow, first will be the easier purchase of Apple’s devices by customers via the pay-later service instead of traditional credit cards, followed by the service's transaction fee for merchants, noted Apple Insider.

There is no clarity on what this merchant fee would be and if it would be similar to a credit card merchant fee.

Apple introduced its Apple Card in March 2019 in partnership with Goldman Sachs GS and Mastercard MA.

Previously, Apple has also offered buy now, pay later in Canada through a partnership with Affirm Holdings Inc AFRM.

Price Action: On Wednesday, Apple shares closed nearly flat at $147.92 in the regular trading and fell 0.5% in extended trading, according to data from Benzinga Pro.

Read Next: Why Apple CEO Tim Cook 'Deeply Fears' Withering Away Of Privacy

Posted In: Apple CardApple Financing LLCApple Pay LaterFintechNewsTechMedia

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.