Apple’s kind of a bank now

Illustration by Alex Castro / The Verge

According to reports from CNBC, Apple doesn't plan on shifting its responsibility for lending to a financial service for its new buy now pay later service. Apple Financing will not be part of Apple's main business, but is licensed to provide lending services.

Pay Later was announced by Apple at the Worldwide Developers Conference. Users will be able to make a purchase through Apple Pay, and then pay it back in four equal installments with no interest.

This isn't Apple's first venture into finances, but it's the first time it's taking on financial responsibilities The financial firm plays a small part in Apple's new Pay Later service, but is currently partners with it to carry out these tasks for the Apple Card. People will need to use Apple's Mastercard-based credit card in order to pay later. Apple Financing doesn't have a bank charter, so it's technically and legally not a bank

Apple will run credit checks on people who apply for its Pay Later service, according to CNBC. According to the outlet, Apple won't report missed payments to credit bureaus and won't give extra credit to users who miss payments. CNBC thinks Apple Pay Later will have a cap of about $1,000. We don't know if Apple will charge a late fee for missed payments or not.

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The ugly economics behind Apple’s new Pay Later system

The consolidation of financial services under one roof indicates a harder push into finances in the future. It means that the goal is to keep users in the system. With Apple offering access to its Card and new Pay Later service from within Apple Pay, you're virtually locked into owning and holding onto your phone to use most of its features. Pay Later is going to be rolled out to customers in the US first.

Apple's Pay Later is under fire for the risk it poses to consumers. Customers who use these services are more likely to go into debt. Government regulators have begun to scrutinize existing BNPL services over the potential risks they pose to consumers.