Apple aims to develop its own payment processing technology and infrastructure

Bloomberg’s Mark Gurman quoted people familiar with the matter as saying that Apple said it was developing a first-party payment processing technology code-named “Breakout”, aiming to develop its own payment processing technology and infrastructure which could also help the company expand its payments capabilities into markets outside the U.S., reducing Apple’s reliance on external partners.

Moreover, Apple’s current financial services include its own brand credit cards, peer-to-peer payments, wallet applications, and mechanisms for merchants to accept credit card payments with iPhones. Bloomberg News previously reported that Apple is also developing a hardware subscription service and a “buy now, pay later” feature for Apple Pay.

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Part of the work on the project, internally code-named “Breakout,” underscores Apple’s desire to break away from the existing financial system, a person familiar with the matter said, speaking on condition of anonymity. 

The program, which has been going on for several years, puts a lot of financial pressure on the company, including payment processing, loan risk assessment, fraud analysis, credit checks, and additional customer service functions such as handling disputes.

Furthermore, the project is focused on future products rather than Apple’s existing array of services. Still, the news sent shares of two of Apple’s partners, CoreCard Corp. and Green Dot Corp., down more than 8%, while another key financial partner, Goldman Sachs Group Inc., fell 1.2%.

It is reported that the Apple Credit Card currently relies on the services of CoreCard Corp. As core processors, they are responsible for the process of sending transaction details to the bank for approval. In addition, other parts of the card rely on Goldman Sachs Group, such as lending, some customer service work, credit checks, and the processing of transactions and payment history.

Bloomberg previously said Apple was working on a “buy now, pay later” feature. The service allows users to choose between four interest-free installments (every two weeks) through Apple’s payment system when a user purchases a product or every few months. Apple internally refers to the first four payment methods as “Apple Pay in 4”, while the long-term payment method is called “Apple Pay Monthly Installments”.

In addition, Gurman also reported that Apple will continue its partnership with Goldman Sachs while discussing the use of in-house technology in four installment plans. For international users, their own financial services “may help Apple expand future financial services to other countries.”

Apple Pay is now available in more than 70 countries and regions, but services like peer-to-peer payments, Apple Card and Apple Cash are still only available in the United States. “Partners like CoreCard and Green Dot remain stuck in the U.S. market, which also limits Apple’s ability to grow,” Gurman wrote.

(via)