Apple's iPhone Pay Later plan may have a naughty list and a nice list

Following on from the Apple Card, Apple's next financial product is expected to be a Pay Later service available on devices including the iPhone and iPad. And according to a new report, it's going to base its loan decisions on something traditional financial firms don't have: your Apple purchase history.

According to Bloomberg's Mark Gurman the service, which is expected to launch in the US in the next few weeks, is currently in beta with a spending limit of $1,000 and criteria based not just on your income but your Apple Store, Apple.com and Apple Store App purchases; Apple Cash transactions; App Store transactions; and the cards associated with your Apple Pay.

The reason? Unlike other financial products, Apple isn't getting third parties to handle the money side of things – so this time, Apple's carrying all the risk.

What do we know about the Apple Pay Later program?

The Pay Later service was announced last year and is expected to be a Klarna-style payment system where you can repay purchases in multiple equal payments over a short period of time, such as eight weeks. 

The program looks and works just like Apple Pay, and according to Apple it offers the same level of security: your account details aren't shared with the retailer. The $1,000 spending limit will depend on the criteria outlined above, and if the option to Pay Later is available to you it'll be there on the Apple Pay checkout screen or page. You'll then be able to see your status and upcoming payments in the Wallet app.

For now it seems likely that the Pay Later option will be limited to the US, partly so Apple can see how successful and useful it is and partly because other territories may be more complex. Regulation of buy now pay later schemes in the UK is different than it is in the US, and lenders will need to be approved by the Financial Conduct Authority from this year onwards. That approval requires lenders to carry out detailed affordability assessments as well as detail how they'll deal with late payments and defaults, and such regulation may be more than Apple is currently willing to take on.