Apple Developing In-House Payment Processing Technology for Future Finance Products

Apple is working on a multiyear plan to bring its financial services in-house in the future, cutting down on the need for financial partners like Goldman Sachs, reports Bloomberg.

Apple is developing payment processing technology and infrastructure such as lending risk assessment, fraud analysis, credit checks, and dispute handling, plus it is working on tools for calculating interest, rewards, approving transactions, reporting data to credit bureaus, increasing credit limits, and more. Part of this project is called “Breakout” internally, as it would see Apple moving away from the current financial systems that it uses.

At the current time, Apple works with Goldman Sachs Bank and CoreCard for the Apple Card, Green Dot for Apple Cash, and Citizens Bank for the iPhone Upgrade Program, but Bloomberg says Apple’s work on financial services would be aimed at future products rather than its current products.

Apple already has Apple Pay and ‌Apple Card‌, plus it is developing a future subscription service for hardware and a “buy now, pay later” option for ‌Apple Pay‌ transactions.

The “buy now, pay later” feature, which is called “‌Apple Pay‌ Later” internally, is expected to be the first product to use Apple’s new system. There will be an option for a four-payment ‌Apple Pay‌ purchase called “‌Apple Pay‌ in 4,” and an option for long-term payment plans through “‌Apple Pay‌ Monthly Installments.” The ‌Apple Pay‌ in 4 feature could use Apple’s in-house payment processing, while the longer term financing would be handled by Goldman Sachs.

In the future, Apple could also use its new system for the hardware subscription plan that it has in the works, plus it could serve as lender for more “buy now, pay later” services. To start with, Apple could limit risk by requiring customers to use debit cards, plus its in-house risk assessment tools could take into account Apple purchase history and factors like whether a credit card attached to the App Store has been declined to determine whether a customer can use the payment services.

According to Bloomberg, Apple has faced some “hurdles” building its financial services product, so there is a chance that it could end up delaying its plans, or could continue to work with partners, though this is a “very unlikely scenario.”