Report Delves Into Why Apple and Goldman Sachs Want to Break Up

[switz]

The approval of a new customer with a low credit score is the problem of the lender. If they had higher standards, then there would less losses. They are bitching because the law of averages handed them more low credit worthy folks than uber rich. So they get to bask in the glow of their own greed for finance interest charges.

My Apple card worked fine in the UK, Ireland, Greece and Austria a few months back. My Platinum Amex was not acceptable in most places unless they were the high price retailers/restaurants. And those asked if I had a different card.

My CostCo Citi card actually pays more "cash back" due to higher percentages than the Apple Card (4% on gas for City vs 2% for Apple).

So the difference is Apple refunds immediately and CostCo does just once per year. I select the card that has the best cash back for the purchase in question.

However, Apple does not charge anything for the card while CostCo has a high "membership" fee and my Amex has a $650 fee for just my card and a lower one for my wife's. I keep the Amex (since 1968) as it will get us tickets home from anywhere in the world in an emergency as there is no credit restriction for me.

 

[jsalda]

Apple Card serves as a loss leader to keep customers in the ecosystem and encourage buying Apple hardware. Great for Apple but there is no such benefit for card issuers.

The Card is analogous to selling Apple TV 4K for $129. It's basically a really cheap Mac in terms of hardware. Apple can sell it because of ongoing Apple TV+ service revenue. Banks can't do the same.

No annual fees, late fees, or fees for foreign transactions, plus high yield savings. Like it or not, banks gotta eat too.

Yes they do, but traditionally, financial institutions are the most non-customer oriented businesses out there. Look how they lost their minds when they got a taste of their own medicine with GameStop.

 

[rhett7660]

Broad-stroking here…
This feels similar to Apple’s toe-dip into the mobile phone market when they partnered with both Motorola and AT&T on the Rokr (2005). While it was presented/marketed as the “first phone with iTunes,” this was actually a clever ruse. A Trojan Horse. It’s no coincidence that two years later, iPhone is debuted.

Similarly, Apple needed GS to get Apple Card off the ground. I suspect their ultimate goal is to cut out the middleman (GS), act as “the bank,” and in doing so, control the whole Apple Card experience while enjoying all of the profits. It would seem classic Apple.

And bingo... I think this is exactly what they are doing. Let's see how it works, let's look at ALL the regulations that happen to come with banking, let's partner up, learn, and then do it ourselves.

 

[Jack Burton]

Goldman prioritized regulatory compliance and profitability.

Surprised at the first part, not surprised by the second.

 

[WarmWinterHat]

Yes they do, but traditionally, financial institutions are the most non-customer oriented businesses out there. Look how they lost their minds when they got a taste of their own medicine with GameStop.

Citron Research, some venture capitalists and hedge funds were the losers in the GameStop saga. The big banks didn't participate in all that nonsense.

 

[JamesHolden]

And bingo... I think this is exactly what they are doing. Let's see how it works, let's look at ALL the regulations that happen to come with banking, let's partner up, learn, and then do it ourselves.

I doubt that's what's going on. They aren't going to become a bank. Given all of the headaches with banking, what's the incentive for them? Tons of regulatory scrutiny and an army of customer service people to chase down people who don't pay, etc? Seems like a total waste of their time. Having a banking partner who handles all of that stuff makes a lot more sense.

 

[JamesHolden]

Because Goldman Sachs was new to consumer banking and was eager to establish a deal with Apple, it is not collecting fees that it would typically get in a partnership for a credit card. Goldman Sachs does not get a portion of the fee that merchants pay to Apple to accept the Apple Card. Retailers pay a percentage of each transaction when taking a credit or debit card payment, and Goldman Sachs gets no funding from this.

Goldman Sachs is unable to collect annual fees, late fees, or fees for foreign transactions because the Apple Card does not charge these fees. Apple does pay for the Daily Cash that users earn, and Goldman Sachs is able to earn money from loans issued to cardholders who split Apple product purchases into installments, but it is not making enough for the deal to be appealing to a new partner.

Gee, I wonder why they want out... Sounds like a terrible deal for Goldman. Goldman gets all of the headaches and none of the benefits. Why they agreed to partner with Apple, given what a terrible deal they got, is beyond me. They should have seen this disaster coming from miles away.

 

[mono1980]

Because GS is greedy. That's all you have to say.

 

[switz]

Maybe the glint from the fat interest charges (close to 30%) on unpaid balances blinded them to the reality of who they were signing up.

 

[rhett7660]

I doubt that's what's going on. They aren't going to become a bank. Given all of the headaches with banking, what's the incentive for them? Tons of regulatory scrutiny and an army of customer service people to chase down people who don't pay, etc? Seems like a total waste of their time. Having a banking partner who handles all of that stuff makes a lot more sense.

I think we can say the same thing about phones... all of the regulations, patents, and customer services items you have to handle. I wouldn't be surprised if they do become a bank, they keep it to a credit card and savings, like what they are doing now.

 

[JamesHolden]

I think we can say the same thing about phones... all of the regulations, patents, and customer services items you have to handle. I wouldn't be surprised if they do become a bank, they keep it to a credit card and savings, like what they are doing now.

I think banking and financial regulations are a much deeper level of hell than phones and consumer electronics in general. The Watch is a better analogy in my mind. Apple still hasn't jumped through all the hoops to get the Watch registered as a medical device. I'm sure Apple has no desire to deal with the FDA. What's in it for them? Same goes for banking. Why go there? They make 40% margins on hardware. How does the company benefit from becoming a bank? Right now they let the partner bank deal with all of miserable stuff as they skim the cream from the top.

 

[rhett7660]

I think banking and financial regulations are a much deeper level of hell than phones and consumer electronics in general. The Watch is a better analogy in my mind. Apple still hasn't jumped through all the hoops to get the Watch registered as a medical device. I'm sure Apple has no desire to deal with the FDA. What's in it for them? Same goes for banking. Why go there? They make 40% margins on hardware. How does the company benefit from becoming a bank? Right now they let the partner bank deal with all of miserable stuff as they skim the cream from the top.

Oh I agree they are... But I can see them doing this and using someone to learn from to do this.

 

[TundraKing]

I've had an Apple Card from day 1 but it has never been my primary card. Data connectivity is from the 90's as it never implemented comprehensive integrated data transfer with financial management tools whereas that has been in place for countless other financial brands for years.

..So much for "cutting edge" usability.....

Goldman just doesn't understand retail banking... and apparently doesn't have any desire to.

 

[DarthDon]

‼️

How do you buy an iPhone or Mac? Do you take bags or stacks of bills with you to the Apple Store? And, count out the money manually in front of an employee?

“That's $100; that's $200, that's $300, that's $400…” 🙈 😁

How about buying a car? 🤷🏼 😵‍💫

Or, do you consider writing a check the same as “cash”?

Do you never shop on line?! Can't pay cash or write a check on a website. Or, is there a way? Do you view PayPal as paying with “cash”?! Really curious…

Credit cards offer buyer protection, extended warranties, online shopping, etc. Their convenience is well worth it.

Belive it or not - stores still take money. If you buy something expensive like a car, you can send money from one bank account to another. If you are an online costumer, you get an costumer profile, you order and do it the same way - at least here in europe. It is easy and safe. Every business who doesn't off er that is off - al least with me ;-).

 

[jacox3]

I long for the day that they both split ways, from a ecosystem stance the Apple Card has been great for me, when it works it works great, tap to pay, easy account viewing and payment, couldn't ask for much more (maybe rewards or points). I've been the worse customer for them, it was my primary card, use it for everything, pay it off every month, and in 4 years have paid $150 in interest, on the surface they have made nothing off of me using the card everyday. When it goes wrong, oh boy does it suck. Any by wrong I mean transaction disputes, 6+ months for vendors going MIA to get a refund, constant siding with the merchants with no documentation to prove it. 4 disputes filed all needing the BBB is get involved to get a real person to talk with me, 3 or 4 resolved after way to much effort needed, and 1 still be fought. I hope that the next revision of the Apple Card has better support, until then I have to take my card transactions to a real bank. </rant>

 

[Tagbert]

I’m curious what is a 401k? I’m not in the US but seen the term before no idea what one is.

A 401K is an American investment plan for retirement income accounts. It's like a pension in some ways. You typically have money automatically taken out of your paycheck and put into an index fund stock investment plan. The money that comes out is taken out before taxes are taken out. You will eventually have to pay taxes on it when you retire but the assumption is that your income and tax rate will be lower. While the money is in the investment plan, it gains value as the stock market rises. You are supposed to not touch it until you retire.

 

[judahde]

As a former Compliance Officer for a major bank, the whole thing was not a match made in heaven.
Neither Apple nor GS had experience with consumer compliance under RegZ.
On a lark, I obtained an Apple Card. The process was a horror show with multiple regulatory violations.

Apple is used to getting their way. However, they're up against an immovable wall of regulatory compliance, which they are ill equipped to handle. Their usual MO of blaming the supplier (in this case GS) will not fly.

No other bank should want to sign up for this experience. But, I'm sure they'll find some new fool to kiss Apple's rear.

 

[bruinsrme]

Did anyone notice that the chip on the physical Apple Card is on the right side of the card rather than the left like most cards? The card still works in a chip reader because the vertical orientation and the contacts are arranged to work properly. Just seems the location of the chip is odd. It is, however, a very good looking physical card made of metal.

I have never used the physical card. I took it out of the bi fold it came in the day I got it, did what I needed to do and put it in the safe.

 

[Gengar]

I have Chase, Citi, Barclays, Capital One, and Discover, so I’m good on credit cards.

 

[Dark_Omen]

Don't understand why GS isn't receiving money from each merchant transaction and the interest -- that should be good enough in terms of profit.

GS is just clueless. There's literally nothing they offer to the world that's better than what banks like JP Morgan/Chase, Citi, and U.S Bank offer.

 

[raythompsontn]

I have never used the physical card.

Neither have I. My CITI card through Costco provides better rates on cash back. I have used Apple Pay for Apple products, but never the physical card. It is a good looking card and unique.

 

[raythompsontn]

There's literally nothing they offer to the world that's better than what banks like JP Morgan/Chase, Citi, and U.S Bank offer.

Purchasing Apple products the 3% cash back is a good deal. Otherwise other cards have better rebates.

 

[switz]

My actual white Apple Card has resided in the safe since day one. I have used the app on my iPhone for years as well as entering the "card" info onto vendors sites. Really no issues.

As has been mentioned, the CostCo City card has better cash back rates, but you only get to see the cash once per year wihile Apple's dribbles into the savings account daily getting interest. Some years, the Costco cash back was several thousand dollars. Much smaller amounts now that a significant percentage of that cash flow is diverted to my Apple Card world.

 

[JapanApple]

The last time I purchased a car, I walked into the dealership and negotiated a very good deal. When I got the price I was looking for they said, "Now, can we talk finance?" My response was, "can I just put it on my card?" They looked at me funny because, it was the most expensive model they make. Then they said, no. My response was, "Excuse me. I need to run across the street. Give me 20 minutes. I came back with a cashier's check. They were visibly upset, but they took the money. (Always get the price of the car in writing before you walk out.)

seen many movies, haven't you?🤣

 

[StyxMaker]

How do you buy an iPhone or Mac? Do you take bags or stacks of bills with you to the Apple Store? And, count out the money manually in front of an employee?

“That's $100; that's $200, that's $300, that's $400…”

How about buying a car? ‍

Or, do you consider writing a check the same as “cash”?

Do you never shop on line?! Can't pay cash or write a check on a website. Or, is there a way? Do you view PayPal as paying with “cash”?! Really curious…

Credit cards offer buyer protection, extended warranties, online shopping, etc. Their convenience is well worth it.

My grandfather always paid cash when he bought a new car. I don’t think he ever had a credit card, and always had a wad of $100 bills in is wallet.