Apple Ending Apple Card Partnership With Goldman Sachs

[BaldiMac]

Actually, Goldman Sachs has claimed that they’ve lost money on the Apple Card.

Apple Card Has Cost Goldman Sachs Over $1 Billion in Losses

The losses stem from the vast investment that Goldman Sachs has funneled into Apple Card, reported to be somewhere between $1 -3 billion.

www.pcmag.com

I certainly agree with your point, but your sourcing is incorrect. GS didn't make the claim. Bloomberg's unidentified sources did.

 

[brofkand]

That's a nonsensical response to the irrefutable point that losses and disappointing profits are definitionally different things. GS would not assert otherwise, and GS doesn't claim that it's losing money on the Apple Card. GS's gripe is just that it isn't making enough money. Exactly as I said in the first place. I'm not here to convince GS of anything - I simply assert that it is greedy. And I suspect it would agree: when you're in the banking business, "greed is good," as Gordon Gecko said.

I’m sure if you tell Goldman they’re just being greedy and they actually are making plenty of money, they’ll re-think their strategy and keep Apple Card. After all, you seem to know better than a 154 year old financial firm.

 

[lartola]

Another article (linked below) also used the phrase "pay Apple":

"But Goldman Sachs also doesn't collect standard credit card fees in its Apple partnership as it doesn't get a portion of what merchants pay Apple to accept the Apple Card."

Will a soured Goldman Sachs-Apple deal leave bad taste for Apple Card users?

If Tim Cook can't get an Apple Card, what does that say about the problems between Goldman Sachs and Apple? Here's what you should know if you have an Apple Card or are considering applying.

www.zdnet.com

And it’s wrong too. Merchants don’t pay anything directly to apple and don’t always pay apple indirectly either. The phrase ‘merchants pay apple’ is based on a completely flawed assumption. The only reason GS isn’t getting any money worth of merchant fees is because they don’t provide payment services to merchants.

 

[lartola]

Sure you can. All of us are aware that merchants don't pay Apple directly.

And they don’t always pay indirectly either. They might pay indirectly if their payment services provider is also a card issuer that lets its customers add their cards to wallet to use them with apple pay and therefore pays a fee to apple, but surely they won’t if their payment services provider isn’t an apple pay participating card issuer or isn’t a card issuer at all.

 

[webkit]

And it’s wrong too. Merchants don’t pay anything directly to apple and don’t always pay apple indirectly either. The phrase ‘merchants pay apple’ is based on a completely flawed assumption.

Again, "pay Apple" could be interpreted similar to how consumers "pay a state" sales tax on a purchase.

Unless someone has specific details regarding the agreement between Apple and Goldman Sachs, I don’t know if anything can be definitely concluded. Assumptions can be made, which is fine but not necessarily anything more than that. What if as part of the Apple Card agreement, GS chose not to take its cut of interchange fees and that cut instead went directly or indirectly to Apple? With all of the other things GS reportedly gave up (not collecting annual fees, late fees, foreign transaction fees) in order to do the partnership with Apple, it wouldn't be a stretch to think that GS's cut of interchange fees went to Apple one way or another instead.

The only reason GS isn’t getting any money worth of merchant fees is because they don’t provide payment services to merchants.

But card issuers, which Goldman Sachs is with Apple Card, would typically receive part of the interchange fee (paid by merchants).

 

[lartola]

Again, "pay Apple" could be interpreted similar to how consumers "pay a state" sales tax on a purchase.

Unless someone has specific details regarding the agreement between Apple and Goldman Sachs, I don’t know if anything can be definitely concluded. Assumptions can be made, which is fine but not necessarily anything more than that. What if as part of the Apple Card agreement, GS chose not to take its cut of interchange fees and that cut instead went directly or indirectly to Apple? With all of the other things GS reportedly gave up (not collecting annual fees, late fees, foreign transaction fees) in order to do the partnership with Apple, it wouldn't be a stretch to think that GS's cut of interchange fees went to Apple one way or another instead.





But card issuers, which Goldman Sachs is with Apple Card, would typically receive part of the interchange fee (paid by merchants).

Again incorrect. You keep on assuming that it’s always the case that part of the interchange fee paid by merchants goes to apple. It isn’t always the case, it’s only sometimes. What part of that don’t you understand?

 

[webkit]

Again incorrect. You keep on assuming that it’s always the case that part of the interchange fee paid by merchants goes to apple. It isn’t always the case, it’s only sometimes. What part of that don’t you understand?

I never said it was necessarily always the case. Even if it's just sometimes the case, it would be reasonable to say "merchants pay Apple" as (according to your statement) part of the interchange fee paid by merchants "sometimes" goes to Apple. Merchants pay it...it goes to Apple. Merchants "pay Apple" in the sense that a consumer may "pay a state" sales tax on a purchase.

My question is, how do you know it's "only sometimes"? Perhaps the Apple Card agreement has the entire portion of the interchange fee that would normally go to a card issuer (GS in this case) going to Apple?

 

[BaldiMac]

IMerchants "pay Apple" in the sense that a consumer may "pay a state" sales tax on a purchase.

This is a completely disingenuous argument. Consumers don't "pay a state." The pay the merchant a "state sales tax" that the merchant in turns pays to the state.

You are doubling down on an argument that you admit you have no evidence of whatsoever. You don't know what the split is. And you don't know how the split compares to other branded cards. Heck, we know for a fact that GS keeps some of the interchange fees in the form of daily rewards.

 

[lartola]

I never said it was necessarily always the case. Even if it's just sometimes the case, it would be reasonable to say "merchants pay Apple" as (according to your statement) part of the interchange fee paid by merchants "sometimes" goes to Apple. Merchants pay it...it goes to Apple. Merchants "pay Apple" in the sense that a consumer may "pay a state" sales tax on a purchase.

My question is, how do you know it's "only sometimes"? Perhaps the Apple Card agreement has the entire portion of the interchange fee that would normally go to a card issuer (GS in this case) going to Apple?

But you implied it was always by saying ‘merchants pay apple’ That phrase implies it’s always. And I already explained why it’s just sometimes: if the merchant’s payment services provider isn’t also an apple pay participating card issuer (and there are many of such) then no part of the fee paid by that merchant for card transactions ever goes to apple.

 

[BaldiMac]

But you implied it was always by saying ‘merchants pay apple’ That phrase implies it’s always. And I already explained why it’s just sometimes: if the merchant’s payment services provider isn’t also an apple pay participating card issuer (and there are many of such) then no part of the fee paid by that merchant for card transactions ever goes to apple.

I think you are talking about something different. That poster is assuming that the portion of the interchange fee that would normally go to the bank is going to Apple instead of being split with GS.

 

[webkit]

This is a completely disingenuous argument. Consumers don't "pay a state." The pay the merchant a "state sales tax" that the merchant in turns pays to the state.

They "pay a state" via the sales tax they may pay on a purchase. Consumers pay a sales tax, states get sales tax revenue. Just because it's not a direct payment doesn't mean consumers aren't ultimately paying it to the state.

You are doubling down on an argument that you admit you have no evidence of whatsoever. You don't know what the split is. And you don't know how the split compares to other branded cards. Heck, we know for a fact that GS keeps some of the interchange fees in the form of daily rewards.

I am simply reacting to text and comments from/about articles. The MR article states that GS "is not collecting fees that many credit card issuers receive" and "does not get a cut of the fee that merchants pay Apple to accept the Apple Card." The ZDNET article states that GS "doesn’t collect standard credit card fees" and "doesn’t get a portion of what merchants pay Apple to accept the Apple Card."

Based on information I've read, I find it perfectly reasonable to conclude that standard credit card fees include interchange fees and if GS isn't getting them, Apple is and whatever those amount to are therefore "what merchants pay Apple."

Unless someone has inside information regarding details about the Apple Card agreement and can provide more clarity, I am going to continue to assume the above as I feel it is a very reasonable interpretation. No one else has been able to provide a better one at this point IMO.

 

[webkit]

But you implied it was always by saying ‘merchants pay apple’ That phrase implies it’s always. And I already explained why it’s just sometimes: if the merchant’s payment services provider isn’t also an apple pay participating card issuer (and there are many of such) then no part of the fee paid by that merchant for card transactions ever goes to apple.

I was not implying "always" as specific details remain unknown. Unless more details regarding the Apple Card agreement can be provided, however, I think it is perfectly logical to conclude based on posted articles I've read that standard credit card fees include interchange fees and if GS isn’t getting a cut, Apple is and those are therefore "what merchants pay Apple."

 

[dork]

I’m sure if you tell Goldman they’re just being greedy and they actually are making plenty of money, they’ll re-think their strategy and keep Apple Card. After all, you seem to know better than a 154 year old financial firm.

You seem very confused. Where have I said that I hope my opinions have any impact upon GS? Are you of the view that we should not criticize anything that we cannot directly change? And if so, then why do you keep @Ing me with weird comments? Because nothing you've said has changed any of my views at all, other than reducing my estimation of your rhetorical and reading comprehension skills (but maybe that's your goal?).

 

[BaldiMac]

They "pay a state" via the sales tax they may pay on a purchase. Consumers pay a sales tax, states get sales tax revenue. Just because it's not a direct payment doesn't mean consumers aren't ultimately paying it to the state.

As usual, you're playing with words to avoid admitting you're wrong. And you know that, as evidenced by your deliberately ending your quote between "state" and "sales tax".

I am simply reacting to text and comments from/about articles. The MR article states that GS "is not collecting fees that many credit card issuers receive" and "does not get a cut of the fee that merchants pay Apple to accept the Apple Card." The ZDNET article states that GS "doesn’t collect standard credit card fees" and "doesn’t get a portion of what merchants pay Apple to accept the Apple Card."

Based on information I've read, I find it perfectly reasonable to conclude that standard credit card fees include interchange fees and if GS isn't getting them, Apple is and whatever those amount to are therefore "what merchants pay Apple."

Unless someone has inside information regarding details about the Apple Card agreement and can provide more clarity, I am going to continue to assume the above as I feel it is a very reasonable interpretation. No one else has been able to provide a better one at this point IMO.

That's my point. You're uncritically reacting to comments made without source, detail or context in order to arrive at your preferred conclusion. Despite direct evidence to the contrary.

 

[BaldiMac]

I was not implying "always" as specific details remain unknown. Unless more details regarding the Apple Card agreement can be provided, however, I think it is perfectly logical to conclude based on posted articles I've read that standard credit card fees include interchange fees and if GS isn’t getting a cut, Apple is and those are therefore "what merchants pay Apple."

More evidence of you playing with words. It is perfectly clear that the "standard credit card fees" referred to in the articles are consumer fees such as late fees.

 

[goonie4life9]

A big problem was Apple's insistence on the Apple Support model of customer service: first-level staff can read public support documents and has no more access to account details than a customer, second-level staff have a little more access and are primarily there to escalate issues to level three, and third-level staff have access to all information but do not directly talk to customers. This works ok for technical support but is completely unacceptable for financial services.

 

[webkit]

As usual, you're playing with words to avoid admitting you're wrong. And you know that, as evidenced by your deliberately ending your quote between "state" and "sales tax".

I am not playing with words. If you don't think consumers pay sales tax to the state as part of a purchase of a taxable item then I can't help you and there's no point in continuing this discussion.

That's my point. You're uncritically reacting to comments made without source, detail or context in order to arrive at your preferred conclusion. Despite direct evidence to the contrary.

Your "point" is wrong. I am not being uncritical. It's not like I am basing my conclusion on content from some amateur, little-known websites. I am also very willing to consider alternative explanations as to what the articles meant by GS "is not collecting fees that many credit card issuers receive", GS "does not get a cut of the fee that merchants pay Apple to accept the Apple Card", GS "doesn't collect standard credit card fees", GS "doesn’t get a portion of what merchants pay Apple to accept the Apple Card", etc.

More evidence of you playing with words. It is perfectly clear that the "standard credit card fees" referred to in the articles are consumer fees such as late fees.

The articles mentioned a "cut of the fee that merchants pay to Apple to accept the Apple Card" (MR) and "Goldman Sachs also doesn't collect standard credit card fees in its Apple partnership as it doesn't get a portion of what merchants pay Apple to accept the Apple Card" (ZDNET). My interpretation here is that "standard credit card fees" include the interchange fee merchants pay when they accept Apple Card as a payment. Once again, I am not playing with words.

 

[redheeler]

I presume that most hardcore Apple users who'd get the Apple Card are financially stable enough to make on-time payments. Fewer opportunities to charge interest = not much profit for Goldman Sachs.

 

[Tagbert]

I presume that most hardcore Apple users who'd get the Apple Card are financially stable enough to make on-time payments. Fewer opportunities to charge interest = not much profit for Goldman Sachs.

Supposedly they set the qualifications for acceptance a little low and a high percentage of people have defaulted on their cards. I don’t know who set that threshold but it was a noticeable number of losses.

 

[Eric Idle]

That's a nonsensical response to the irrefutable point that losses and disappointing profits are definitionally different things. GS would not assert otherwise, and GS doesn't claim that it's losing money on the Apple Card. GS's gripe is just that it isn't making enough money.

Back in January, we learned that Apple Card has been responsible for more than a billion dollars in losses for Goldman Sachs in recent years. Now amid rumors that Apple is looking to leave Goldman for Amex, the former has reported its Q2 earnings and the results aren’t pretty.


The exact amount of losses Goldman Sachs has seen with its Apple partnership isn’t quite clear, but since 2020 it’s somewhere in the ballpark of $1-3 billion.

Earlier this year we learned those consumer banking losses have come mostly from Apple Card and a Goldman acquisition called GreenSky.

As for why Goldman is seeing such a tough time with its nascent consumer banking offerings, the company says the primary cause is loan-loss provisions which are when a bank has to compensate for greater than expected unpaid credit card balances and loans.

 

[lartola]

Back in January, we learned that Apple Card has been responsible for more than a billion dollars in losses for Goldman Sachs in recent years. Now amid rumors that Apple is looking to leave Goldman for Amex, the former has reported its Q2 earnings and the results aren’t pretty.


The exact amount of losses Goldman Sachs has seen with its Apple partnership isn’t quite clear, but since 2020 it’s somewhere in the ballpark of $1-3 billion.

Earlier this year we learned those consumer banking losses have come mostly from Apple Card and a Goldman acquisition called GreenSky.

As for why Goldman is seeing such a tough time with its nascent consumer banking offerings, the company says the primary cause is loan-loss provisions which are when a bank has to compensate for greater than expected unpaid credit card balances and loans.

And that didn’t happen only with the apple card, it also happened with one other credit card that GS issues in partnership with General Motors.

 

[orangeadrenaline]

I still say the despite what people think, Apple is still seriously considering Capital One as their next partner for Apple Card. After all, Capital One has massive experience working with consumer credit cards (the Apple Card is a consumer credit card), and Capital One wouldn't financially suffer working with Apple.

Well, Walmart hasn't been happy with them:

"
Walmart is suing Capital One to end their credit card partnership agreement, alleging the bank fell short of its customer service standards as the exclusive issuer of Walmart's private label and co-branded credit card program in the U.S.
"

 

[Eric Idle]

And that didn’t happen only with the apple card, it also happened with one other credit card that GS issues in partnership with General Motors.

Please read carefully. The article specficially states that APPLE CARD is responsible for MORE than ONE BILLION dollars in losses. Your attempts to mitigate APPLE CARD's role in these massive losses is ineffective.

 

[dork]

Back in January, we learned that Apple Card has been responsible for more than a billion dollars in losses for Goldman Sachs in recent years. Now amid rumors that Apple is looking to leave Goldman for Amex, the former has reported its Q2 earnings and the results aren’t pretty.


The exact amount of losses Goldman Sachs has seen with its Apple partnership isn’t quite clear, but since 2020 it’s somewhere in the ballpark of $1-3 billion.

Earlier this year we learned those consumer banking losses have come mostly from Apple Card and a Goldman acquisition called GreenSky.

As for why Goldman is seeing such a tough time with its nascent consumer banking offerings, the company says the primary cause is loan-loss provisions which are when a bank has to compensate for greater than expected unpaid credit card balances and loans.

Creative accounting. It's not true, as to the Apple Card. Goldman has made good money off of the Apple Card, just not enough to satisfy its desires. The GreenSky purchase was a complete fiasco, though. And these are totally different business units within the retail division at Goldman. It BOUGHT GreenSky and then sold it for a loss of well over a billion dollars (notably that's "in the ballpark of $1-3 billion"). Goldman is simply a servicer for the Apple Card, and it made money on the deal. But Goldman's major institutional investors and hedge fund investors don't like retail and wanted Goldman to get out of it.

 

[dork]

"it looks like Goldman has spent somewhere between $1-3 billion on the [Apple] consumer credit card. The main cause of the losses is said to be from loan-loss provisions (when a bank sets aside money as an expense for future loans it expects won’t be repaid)." I know you y’all are mostly computer people and not finance people, but what this means it that these so-called "losses" are completely manufactured losses. It's an entirely speculative accounting entry along the lines of "we think we might maybe possibly could have $2 billion in defaults at some point in the future, maybe, so we're going to earmark $2 billion of our existing assets now and call those potential future defaults a 'loss' on today's books." They do this for tax reasons, but Goldman is not actually out of pocket.