Goldman Sachs just doesn't understand...
...retail banking 👉 the story about Apple Card!
Hi sharkies,
have you already heard the big news? 🔦
Goldman Sachs just doesn’t understand retail banking 💰
Apple Card is causing them to lose money and the reason is sooo stupid that you barely can believe it!
Ready to know everything you need to know about Goldman Sachs and Apple Card in 5 minutes? ⏳
Before we start…
How it all started?
The Apple Card is a credit card launched by Apple Inc. in partnership with Goldman Sachs as the issuing bank. It was announced in March 2019 and became available to US customers later that year. The card is designed to be used with Apple's mobile payment system, Apple Pay, and is integrated into the Wallet app on Apple devices.
For the story it’s important to remember that Goldman Sachs is first and foremost investment bank, and they don’t deal with individuals, unless you are very wealthy one. But, for Apple they decided to become the issuing bank 👀
While primarily designed as a digital credit card to be used with Apple Pay on iPhones, users also receive a sleek titanium physical card that contains no visible card number, CVV security code, expiration date, or signature. This minimalist design is an emphasis on security and privacy.
If you ask me…it’s another Apple b******, but ok…
Instead of traditional reward points, Apple Card offers "Daily Cash," which is cash back credited to the cardholder's account every day. This can be spent freely, sent to friends via Messages, or even used to pay down the card's balance.
But, get ready for a big one…
Apple Card touts no annual fees, no foreign transaction fees, and no late payment fees. However, like any other credit card, interest will accrue if the full balance isn't paid off.
As of 2022, Apple Card has 6.7 million cardholders. Six in ten Apple Card users use it as their primary credit card.
Goldman Sachs is losing money?
As you can guess from the title…Goldman Sachs is losing money on this deal, but let’s take a look at why 👀
HINT: no fees
Well, there are several key reasons 💡
👉Apple Card has no yearly fixed fee, so the only way Goldman/Apple earns money is through card payment fees.
I guess the logic was since Apple has such a strong user base, it should more than cover having a "free" Apple Card...however...we come to the second problem.
👉 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.
But...wait for this...it gets even better!
👉 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.
It will be interesting to see to whom Goldman Sachs will “offload” this deal, and if this is even possible. Based on some reports, it could take around 18 months to dissolve the partnership.