Apple and Goldman Sachs: A timeline of the messy partnership that will soon fall(9to5mac.com)
9to5mac.com
Apple and Goldman Sachs: A timeline of the messy partnership that will soon fall
https://9to5mac.com/2024/01/26/apple-card-goldman-sachs-deal-ending-report/
56 comments
It would be logical step for Apple to set up its own Financial Services company that would issue CCs itself (using the Visa/MC network). Especially if Apple eventually gets into larger ticket items that are usually purchased on credit, like cars.
The thing that worries me about this, is it’s a slippery slope to becoming the next GE.
I believe the folks at Apple are smart enough to know how to manage that for now, but you’re always one Immelt away from insolvency when you play that game.
I believe the folks at Apple are smart enough to know how to manage that for now, but you’re always one Immelt away from insolvency when you play that game.
> The thing that worries me about this, is it’s a slippery slope to becoming the next GE.
Sony seems to be doing okay, and their Sony Financial Holdings offers online banking services through Sony Bank, life insurance through Sony Life, and insurance through Sony Assurance (albeit only in Japan).
Sony seems to be doing okay, and their Sony Financial Holdings offers online banking services through Sony Bank, life insurance through Sony Life, and insurance through Sony Assurance (albeit only in Japan).
Yea, it’s not to say it can’t be done.
Playing in financial services can be lucrative if done well. The catch is that there is always an existential risk associated with it, and so if it’s not the core business I think anyone should be very very cautious about how they approach it.
If the existential risk can be offloaded to a partner while some upside is retained, it’s probably a good idea.
Playing in financial services can be lucrative if done well. The catch is that there is always an existential risk associated with it, and so if it’s not the core business I think anyone should be very very cautious about how they approach it.
If the existential risk can be offloaded to a partner while some upside is retained, it’s probably a good idea.
the big difference is that Apple has shown over decades that it can/will a very tight focus on a small number of core products, with everything else being in support of that (which Financing would be). It's not like GE making both fridges and nuclear power plants.
>It would be logical step for Apple to set up its own Financial Services company that would issue CCs itself
Why would that be a "logical" step? Goldman Sachs has already lost billions partially because Apple insisted on lower credit standards for applicants' approvals which resulted in a lower quality portfolio of credit-card holders that don't make their payments on time.
In a round about way, Apple (inadvertently) got a bunch of GS money to buy its expensive Apple products and the later issue of creditcard holders getting behind on their debt repayments is GS's problem instead of Apple's.
If Apple started a bank business to underwrite its own credit-card, what do they gain by taking on that extra financial risk? I suppose Apple could theoretically "gain" interest payments but Apple was the one pushing for less credit-worthy applicants which negates the point of getting interest money as profits. GS's losses of $1 to $3 billion already proved that model doesn't work.
It actually seems more logical for Apple to shop the Apple-branded creditcard to other potential backers such as Citi or Chase.
Sure, previous giant companies like General Electric started GE Captial, Sears started, Discover card, Toyota has Toyota Motor Credit... but that doesn't mean Apple wants to get into the bank business.
Why would that be a "logical" step? Goldman Sachs has already lost billions partially because Apple insisted on lower credit standards for applicants' approvals which resulted in a lower quality portfolio of credit-card holders that don't make their payments on time.
In a round about way, Apple (inadvertently) got a bunch of GS money to buy its expensive Apple products and the later issue of creditcard holders getting behind on their debt repayments is GS's problem instead of Apple's.
If Apple started a bank business to underwrite its own credit-card, what do they gain by taking on that extra financial risk? I suppose Apple could theoretically "gain" interest payments but Apple was the one pushing for less credit-worthy applicants which negates the point of getting interest money as profits. GS's losses of $1 to $3 billion already proved that model doesn't work.
It actually seems more logical for Apple to shop the Apple-branded creditcard to other potential backers such as Citi or Chase.
Sure, previous giant companies like General Electric started GE Captial, Sears started, Discover card, Toyota has Toyota Motor Credit... but that doesn't mean Apple wants to get into the bank business.
> Apple insisted on lower credit standards for applicants' approvals which resulted in a lower quality portfolio of credit-card holders that don't make their payments on time.
I thought they only made money when people didn't pay on time and thus have to pay interest payments?
I thought they only made money when people didn't pay on time and thus have to pay interest payments?
Now who the heck from banking sector would ever want to do anything with Apple after this? No deal will be too sweet to ignore this hard lesson.
That's a colossal clusterfuck in banking on GS side (not that they are that rare in banking generally, but they tend to learn quickly).
That's a colossal clusterfuck in banking on GS side (not that they are that rare in banking generally, but they tend to learn quickly).
> It would be logical step for Apple to set up its own Financial Services company
Are they allowed to do this in the US? I remember Walmart wanting to get into financial services, but ended up having to partner with an existing bank instead. Presumably for regulatory reasons.
Are they allowed to do this in the US? I remember Walmart wanting to get into financial services, but ended up having to partner with an existing bank instead. Presumably for regulatory reasons.
A little history, the Apple Card almost didn’t successfully launch. The management associated with it brought in a heavy tech industry contingent to launch Apple Card eschewing all help from the internal bank tech and security teams. As launch approached an audit found horrendously weak security top to bottom, including basic things like credentials checked into the code base, lack of encryption throughout, etc. All this at an extraordinary cost in the hundreds of millions of dollars. Apple was furious since it was about three months from launch and Goldman had proved it was not up to the level technically - when in fact they had hired everyone fresh. So, they suddenly turned to the internal tech and security groups which dropped everything for that summer and sat in war rooms fixing bugs and security flaws so egregious people would get together after work and laugh about the hubris.
The galling thing was the flagrant condescending attitude they treated the internal staff from the beginning. The internal staff had been there offering help day zero and were treated like oldster idiots. Now, the oldster idiots were fixing the hipster techbro mess, cancelling summer plans to clean up a mess they not only didn’t create but had tried to avoid. After a Herculean effort with two weeks to spare the last of the P1 security issues were closed out and Apple Card was ready to launch.
Apple Card was technically a success. It’s probably the most advanced best integrated card platform out there. The business side was a mess, as evinced by their tech industry exclusive hiring and creating the us and them culture.
The galling thing was the flagrant condescending attitude they treated the internal staff from the beginning. The internal staff had been there offering help day zero and were treated like oldster idiots. Now, the oldster idiots were fixing the hipster techbro mess, cancelling summer plans to clean up a mess they not only didn’t create but had tried to avoid. After a Herculean effort with two weeks to spare the last of the P1 security issues were closed out and Apple Card was ready to launch.
Apple Card was technically a success. It’s probably the most advanced best integrated card platform out there. The business side was a mess, as evinced by their tech industry exclusive hiring and creating the us and them culture.
I’m an Apple Card user and love it.
That said, I have no idea how GS convinced itself to sign the contract. For that matter, I have my doubts about the ethics of the people on the Apple side even proposing such terms as the ability to add more categories of stuff that can be bought at 0% interest- that looks like just a transfer of money from GS to Apple.
That said, I have no idea how GS convinced itself to sign the contract. For that matter, I have my doubts about the ethics of the people on the Apple side even proposing such terms as the ability to add more categories of stuff that can be bought at 0% interest- that looks like just a transfer of money from GS to Apple.
Their deal is active till 2029. It’ll be interesting to see what Sachs does. I think AMEX is a better fit for Apple though.
I was surprised to hear that Apple is trying to do finance things in house but in hindsight, that makes sense. This is Apple, after all.
I was surprised to hear that Apple is trying to do finance things in house but in hindsight, that makes sense. This is Apple, after all.
It's up to GS to find a replacement[0].
I think Apple was quite gracious in letting them out (though depending on what news outlet you read the story is spun a couple different ways), but I'm very surprised since GS is generally known (IIRC) as shrewd deal makers. The allure of allying with Apple (and seeming innovative?) was just too strong, I guess -- they did a deal that was bad for them.
As a holder of an Apple card, it's virtually only upside. I'm excited to find out who else is going to try and ride the coat tails of the #1/#2 company in the world and the benefits they'll offer to Apple customers.
Worst case I lose a credit card -- no biggie. Upside, I continue to have access to the credit and maybe an even more prestigious banking institution (AMEX???).
I really don't think that Apple would go ahead and buy up some local bank charters and build their own bank -- only so much antitrust attention a given company wants to invite! But if they did, I'd be excited to see what they'd build -- I bet it would be quite favorable for Apple customers.
[0]: https://www.reuters.com/business/finance/goldman-sachs-faces...
I think Apple was quite gracious in letting them out (though depending on what news outlet you read the story is spun a couple different ways), but I'm very surprised since GS is generally known (IIRC) as shrewd deal makers. The allure of allying with Apple (and seeming innovative?) was just too strong, I guess -- they did a deal that was bad for them.
As a holder of an Apple card, it's virtually only upside. I'm excited to find out who else is going to try and ride the coat tails of the #1/#2 company in the world and the benefits they'll offer to Apple customers.
Worst case I lose a credit card -- no biggie. Upside, I continue to have access to the credit and maybe an even more prestigious banking institution (AMEX???).
I really don't think that Apple would go ahead and buy up some local bank charters and build their own bank -- only so much antitrust attention a given company wants to invite! But if they did, I'd be excited to see what they'd build -- I bet it would be quite favorable for Apple customers.
[0]: https://www.reuters.com/business/finance/goldman-sachs-faces...
> I'm very surprised since GS is generally known (IIRC) as shrewd deal makers. The allure of allying with Apple (and seeming innovative?) was just too strong, I guess -- they did a deal that was bad for them.
Some of it may just be that GS doesn't really know wtf it's doing in the consumer side of finances. See e.g. their $billions of losses on their consumer banking product Macrus, for years and years.
Some of it may just be that GS doesn't really know wtf it's doing in the consumer side of finances. See e.g. their $billions of losses on their consumer banking product Macrus, for years and years.
For me, pretty much the only upside of the Apple credit card is an incremental discount on a free credit card for occasional expensive product purchases. Otherwise I'd probably just as soon not have the additional credit card as it doesn't really make sense for me to use it for anything else.
Ah you mean the 3% discount no Apple products? Because that's pretty decent. Though I think a bunch of other cards spike up to 3% from time to time.
I personally like the access to extra credit, and I think that Apple's platform integration is pretty darn good. Apple's brand power seems to just... work out for people who stick with them (for now!).
They're nowhere near AMEX's legendary customer-friendliness but... I'm willing to see if they try to get there!
I personally like the access to extra credit, and I think that Apple's platform integration is pretty darn good. Apple's brand power seems to just... work out for people who stick with them (for now!).
They're nowhere near AMEX's legendary customer-friendliness but... I'm willing to see if they try to get there!
> AMEX's legendary customer-friendliness
My ex once pulled out his AMEX Gold card at dinner and regaled me on every perk and detail of the program. After that he spent 30 minutes on the phone trying to verify his identity, since they shuttered his account for suspicious long-distance activity.
He did get it sorted out, but the Benihana's folks were running out of patience.
My ex once pulled out his AMEX Gold card at dinner and regaled me on every perk and detail of the program. After that he spent 30 minutes on the phone trying to verify his identity, since they shuttered his account for suspicious long-distance activity.
He did get it sorted out, but the Benihana's folks were running out of patience.
> My ex once pulled out his AMEX Gold card at dinner and regaled me on every perk and detail of the program
Well there it is right there!
> After that he spent 30 minutes on the phone trying to verify his identity, since they shuttered his account for suspicious long-distance activity.
Well not every company is perfect, for credit cards I have I register foreign addresses and get flack. Using a VOIP number with a local area code does help.
> He did get it sorted out, but the Benihana's folks were running out of patience.
Funny considering Benihana is basically built on the concept of wasting time to cook a meal. I hope this happened in the early 2000s.
Well there it is right there!
> After that he spent 30 minutes on the phone trying to verify his identity, since they shuttered his account for suspicious long-distance activity.
Well not every company is perfect, for credit cards I have I register foreign addresses and get flack. Using a VOIP number with a local area code does help.
> He did get it sorted out, but the Benihana's folks were running out of patience.
Funny considering Benihana is basically built on the concept of wasting time to cook a meal. I hope this happened in the early 2000s.
Just a fun anecdote I like telling, nothing against the company (or my ex =))
FWIW I also had consistent trouble with my debit account when traveling. After hearing all the perks I was expecting a concierge to materialize tableside with a full wallet and tray of Perrier. No such luck.
FWIW I also had consistent trouble with my debit account when traveling. After hearing all the perks I was expecting a concierge to materialize tableside with a full wallet and tray of Perrier. No such luck.
I just have a bit of an axe to grind when it comes to Benihana :)
Yeah, given your account and what people have said so far, clearly their marketing has been quite effective on me at least! Even Chase I've had great help from while traveling (letting them handle rebooking rental cars/hotels, etc).
Yeah, given your account and what people have said so far, clearly their marketing has been quite effective on me at least! Even Chase I've had great help from while traveling (letting them handle rebooking rental cars/hotels, etc).
I'm not sure what legendary customer-friendliness means in the context of a credit card. If I want to dispute a charge, I've never really had an issue with calling up the bank and getting it resolved or, presumably, getting a new card issued. And the days where having a physical office in a foreign capital where I could cash a check or whatever is pretty much way in the past.
Good customer service can mean things like the people are pleasant, aren’t working from a stressed call center sweat shop, have the discretion to do what you need, have the knowledge to help you rather than just run some dialog tree.
Discover is much better every time I call them than my Capital One card. And Schwab (bank) is amazing compared to my other bank. The customer agents put me on hold to ask someone in the engineering department to help me with a very weird Zelle bug. It was all so pleasant and made me really appreciate the service. It’s especially noticeable when you need help with a weird situation that takes time to explain and doesn’t fit into some FAQ.
Meanwhile bad customer service is revolting on multiple levels, like revealing that the company wants to save money instead of spend on a good experience.
Discover is much better every time I call them than my Capital One card. And Schwab (bank) is amazing compared to my other bank. The customer agents put me on hold to ask someone in the engineering department to help me with a very weird Zelle bug. It was all so pleasant and made me really appreciate the service. It’s especially noticeable when you need help with a weird situation that takes time to explain and doesn’t fit into some FAQ.
Meanwhile bad customer service is revolting on multiple levels, like revealing that the company wants to save money instead of spend on a good experience.
They closed my account for missing a payment. Not sure where the legendary customer service comment comes from perhaps their marketing is stronger than their offerings
Well that definitely sucks, I mean I didn’t even know you can “miss” a credit card payment, usually you’re late and they increase your bill accordingly.
Sucks to know they’re a bit trigger happy with the account closures
Sucks to know they’re a bit trigger happy with the account closures
I have an Apple Card and never use it. It is handy to have the extra card for the sole purpose of not dinging my credit as much if I decide to carry a balance on the other card I use all the time.
It's also handy to have a spare credit card in case something funky happens with fraud detection when you're traveling. (Or you just leave your card in a restaurant someplace.)
I haven't had an issue of late but after I did have a problem a couple of times I always travel with at least one extra card these days.
I haven't had an issue of late but after I did have a problem a couple of times I always travel with at least one extra card these days.
True. It feels like banks at least in the States have improved their systems around this in recent years. I remember having to call them and tell them I was going overseas and where to about a decade ago. Nowadays they have more sophisticated systems that rarely if ever block me. Usually the problem is on the receiving end of the payment now if anything. Most recent annoyance was trying to book LATAM in Peru a couple of years ago in soles and getting blocked from doing that by LATAM themselves after triggering some weird anti fraud system
No one even seems to want you (or provides a mechanism to) file international travel plans any longer. Been quite a few years since I've had an issue but I used to have some random declines for things like a $15 western US truck stop or a modest grocery purchase.
So true! I remember calling Chase one day on the way to the airport a few years ago to tell them where I was going and hearing “yeah we are actually good enough now you don’t need to tell us”.
Banking lumbers along but this is definitely something I’ve seen an improvement on in the last decade
Banking lumbers along but this is definitely something I’ve seen an improvement on in the last decade
AMEX isn't widely accepted in most part of the world. And given what they did and their demand with Goldman I doubt any other banks wants to work with them. It never made sense in the first place and the only reason why Goldman took the bait was because Goldman had zero Consumer Banking sector market share.
So I am not surprised to hear that Apple is trying to do finance things in house. But with all the regulation burden again it is just another step in the wrong strategy, all in order to pursuit growth of revenue over everything.
So I am not surprised to hear that Apple is trying to do finance things in house. But with all the regulation burden again it is just another step in the wrong strategy, all in order to pursuit growth of revenue over everything.
That's the thing, Apple ended up with Goldman because all the usual credit card companies refused to work on Apple's terms. Apple went above and beyond a normal CC partnership by demanding terms on card issuance and card billing that typically is important in credit card servicing and risks.
AMEX is probably not in any rush to take losses themselves like Goldman ended up doing. Not to mention Goldman has a big customer service issue because Apple's insistence that everyone is billed at the 1st of the month means customer service is flooded the first week and sitting idle the next 3 weeks.
AMEX is probably not in any rush to take losses themselves like Goldman ended up doing. Not to mention Goldman has a big customer service issue because Apple's insistence that everyone is billed at the 1st of the month means customer service is flooded the first week and sitting idle the next 3 weeks.
> Apple's insistence that everyone is billed at the 1st of the month means customer service is flooded the first week and sitting idle the next 3 weeks.
This seems counter productive. While simplicity of due dates on the first of the month is nice waiting on hold sucks. It’s similar to businesses that have a big marketing and discount push centered on a single day and overwhelm their sales funnel capacity.
This seems counter productive. While simplicity of due dates on the first of the month is nice waiting on hold sucks. It’s similar to businesses that have a big marketing and discount push centered on a single day and overwhelm their sales funnel capacity.
They are the poster child for vertical integration.
And I mean they have the capital. It’d be funny if Apple became a bank before X.
And I mean they have the capital. It’d be funny if Apple became a bank before X.
Becoming a bank brings a whole stack of regulations that most companies would rather avoid like the plague.
It's not glass-stegall level of forced separation anymore, but it's still more onerous than is probably worth it for Apple.
But it's possible. You do see it sometimes, e.g. car companies (also worth noting though, most of those have been spun off).
It's not glass-stegall level of forced separation anymore, but it's still more onerous than is probably worth it for Apple.
But it's possible. You do see it sometimes, e.g. car companies (also worth noting though, most of those have been spun off).
For sure, but Apple isn’t most companies.
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Switching to AMEX will make the card less usable internationally, too.
I wouldn't be particularly thrilled to have it switched to Amex, because a number of merchants won't accept Amex, but I am tired of not being able to use my Apple Card at Costco. Amex would be better, there.
I don't remember the details, but the reason they picked MasterCard, was because of some technical infrastructure that MC provides.
I don't remember the details, but the reason they picked MasterCard, was because of some technical infrastructure that MC provides.
It's all about fee negotiations, nothing else.
For Costco, they wanted lower fees. Amex said no. Now they only accept VISA (in the US).
For Costco, they wanted lower fees. Amex said no. Now they only accept VISA (in the US).
Costco’s credit card partners change from time to time based on fee negotiations:
Costco in the US switched from American Express to Citi/Visa in 2016.
Costco in Canada switched from Capital One/Mastercard to CIBC/Mastercard in 2022.
Costco in the US switched from American Express to Citi/Visa in 2016.
Costco in Canada switched from Capital One/Mastercard to CIBC/Mastercard in 2022.
Costco switched to Visa, they pay them quite a few millions to be the Costco Card.
So maybe Costco+Apple could be their own bank and card.
So maybe Costco+Apple could be their own bank and card.
Costco does not accept American Express, which is annoying since it prevents use of the Blue Cash Preferred card.
Maybe, Apple and Goldman Sachs negotiated a better deal with Mastercard esp interchange fees. For instance, Costco pays Visa 0.4% interchange fees for accepting Visa cards exclusively at Costco.
Does Costco even take Amex anymore?
Maybe they still do in Canada?
Maybe they still do in Canada?
Costco takes only MasterCard in Canada.
They don’t since the Costco card changed to Visa
Maybe they don’t. I haven’t had an Amex card in over 20 years.
I know they dont in the States - I dont know about elsewhere.
Credit Card. I lost my CC account. Can somebody suggest a good credit card?
This looks pretty decent: https://www.fidelityrewards.com/credit/welcome.do?exp=&lang=...
Someone wrote that 1.5% gets invested in your Fidelity account.
Cash back would be nice. No exchange fees. Ability to create virtual CC. And strong fraud protection. I dont use Apple products, so I guess no Apple CC for me.
This looks pretty decent: https://www.fidelityrewards.com/credit/welcome.do?exp=&lang=...
Someone wrote that 1.5% gets invested in your Fidelity account.
Cash back would be nice. No exchange fees. Ability to create virtual CC. And strong fraud protection. I dont use Apple products, so I guess no Apple CC for me.
Fidelity now offers 2% on that card: https://www.fidelity.com/spend-save/visa-signature-card
It's pretty good, no FTF. The credit cards reddit is a font of information too.
It's pretty good, no FTF. The credit cards reddit is a font of information too.
Fidelity is quite good. They fairly recently added no foreign exchange fees. No virtual credit cards AFAIK. Can't speak to fees if you don't pay your account in full every month. (Though any of the premium cards are pretty bad if you don't.)