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Apple pulls plug on Goldman credit-card partnership

266 points by voisin 3y ago

wkat4242 3y ago
Good. I'm surprised they even picked a bank with such a controversial history and track record. They're pretty much the Palantir of the financial sector. No way I'd ever do business with them.
- elzbardico 3y ago
  Nah. Every bank is the same. All of them are of full of skeletons on their closets. Banks are pretty shady business but have power enough to lobby their get-out-of-jail card and codify it in law.
deleted 3y ago
[deleted]
not-my-account 3y ago
Hm, what would this mean for Apple Card users? Would it be shut down? How about those who have Apple Savings Accounts?[0] [0] https://www.apple.com/newsroom/2023/04/apple-cards-new-high-yield-savings-account-is-now-available-offering-a-4-point-15-percent-apy/ https://www.apple.com/newsroom/2023/04/apple-cards-new-high-...
- arcdigital 3y ago
  I'm assuming it will be just like any other time a card portfolio is sold or transferred (Costco Card: Amex -> Citi, REI Card: US Bank -> Capital One, GM Card: Capital One -> Marcus (which is Goldman, ironically I think they want to get rid of this card too), etc...). Unless Apple discontinues the card completely, they will choose a new bank, that bank will take on the existing portfolio, everyone will get new cards (maybe numbers depending on how they did the BINs)...but with the physical card not having a visible number, the apple pay card being able to be automatically updated, and the virtual card's number being right there in the app it should be pretty painless. Since Apple manages the whole thing through their own app and not a Goldman Sachs app, it should be fairly seamless as everything should look the same and you won't need to make a new login or worry about how to start paying a new bank. If there's new cards to be issued it's likely it will just show up in the Wallet app and they'll mail you a new physical one. Last year Apple moved the Apple Cash card from Discover to Visa and most people didn't even know that happened. There was even a button to switch it over sooner if you wanted to. With the Savings Account I expect it will be similar as long as they can find a bank willing to offer a similar APY. Especially for people who just use it with the Apple Card and don't deposit directly to it using the routing/account number, you probably won't really notice. source: all speculation, but I have worked extensively in payments for years and have launched banking products.
  - toomuchtodo 3y ago
    Great benefits for Apple Card users to have Apple abstract all the drudgery away. Experience is the differentiator, back office is a commodity. What’s left is to make Apple Cash a deposit account with FedNow instant payment rails access. Buy a distressed regional bank to get a charter if needed. Every iPhone user then becomes a potential banking customer (136M US iPhone users, compared to 66M JPMC household customers, for example). Interchange revenue will slowly decline (again, FedNow), which Apple can compensate for with the deposit spread.
    - CydeWeys 3y ago
      There are lots of downsides to actually becoming a bank, though. It creates many restrictions on the kinds of things you can do, and unless it's the majority of your business, it's not something you want. Better to work with banks but not be a bank yourself.
      - toomuchtodo 3y ago
        I suppose it’s going to depend on how many willing partners are out there with an appetite to be beholden to Big Tech as the smaller partner with less leverage. Evolve just dumped a bunch of fintech partners over the last year (conversely, they were aggressive in who they were willing to partner with), and moving is not trivial. While Apple has deep pockets, I’m sure engineering time is better spent delighting users vs engineering around partner churning. https://fintechbusinessweekly.substack.com/p/evolves-problematic-partners-bankruptcies https://fintechbusinessweekly.substack.com/p/evolves-problem...
        posguy 3y ago
        Depends if Apple really feels they can run a backoffice banking arm effectively and cheaper than a partner that is already at scale. Underwriting credit & customer risk, handling edge cases, maintaining relationships with ATM networks, card networks and ensuring compliance with state and federal banking rules is quite an undertaking. Goldman Sachs did not have scale like Chase, Capital One and others to create a diversified portfolio of clients, limiting their ability to hedge against the risks of a single platform or two dominating their involvement in this market. One bad software update by Apple could flood their support queues, and they can't afford to keep significant staff on hand to keep wait times below an hour (unlike a larger company, who is already staffed up to serve their non-Apple customers).
- parl_match 3y ago
  The rumor is that Apple Card will move to Amex. WSJ says 12-15 months, but AppleCard is contractually obligated to use the MC network until 2025. I can't imagine they'll close all those accounts, so likely we'll see some sort of migration leading up.
  - giobox 3y ago
    This would be a bit of a detractor for me, Amex is not as widely accepted, especially when traveling in Europe. Mastercard is accepted virtually everywhere in the EU and UK.
    - wdb 3y ago
      Yeah, I had an Amex card and it was pretty useless in Europe. Admittingly that was more than five years ago so maybe things have improved by now.
      - giobox 3y ago
        The fact the Apple card was a Mastercard and had no foreign transaction fees was largely the only reason I opened it, as I too find my Amex a pain in the ass in Europe. If it does become an Amex card, I will likely close the account.
        ghaff 3y ago
        For me, Apple Card is mostly only interesting for the discount on Apple. I carry it as a backup otherwise but don't use it.
        throwaway2037 3y ago
        no foreign transaction fees In an FX transaction, what is the difference between a trading fee and a wider spread? Nothing. (Why do people keep falling for this?) What you really want to see is a combined promise. For example: No fees, plus 1% or less FX spread on major currencies. (My preferred credit card promises that.) Honestly, it is very hard to pay a total of less than 1% on foreign transactions. Still, this is pretty cheap, given the convenience.
- deleted 3y ago
  [deleted]
- malwarebytess 3y ago
  I'm more interested in the savings account integration. I've found it super convenient. Too low APR for long term savings, but the convenience is worth the difference to me for short term savings parking. I keep $30K or so in it revolving for moving money around. Not to mention the cashback deposit right to the account.
  - herpdyderp 3y ago
    > Too low APR for long term savings What APR is your baseline for long term savings? I'm interested in where you see significantly higher APR savings accounts because the Apple Card Savings Account is 400x my previous savings account APR.
    - 3-cheese-sundae 3y ago
      As of this writing, Ally is still higher than Apple Savings account (4.25% APY vs 4.15% APY)
    - function_seven 3y ago
      It's way better than my previous savings account as well, but still about 0.5-0.75 points lower than a couple of CDs that I have. Not sure if that counts as significant or not, but I figure it adds up. Apple Savings: 4.15% CIT Bank 6-Mo CD: 4.88% CIT Bank 18-Mo CD: 4.5% I think?
    - jrockway 3y ago
      I don't have a savings account but buy CDs on a regular basis. For the next two years, I have something between 5% and 6% maturing every 3 months. Apple Card Savings is 4.15%. So you can definitely do better than the Apple Card, but to some extent you're paying bankers to do what I do manually every 3 months. (You just pay them in "spread"; they're buying the same CDs I am, but keeping some of the profits to themselves. And letting you withdraw the money whenever you want, not just when the underlying CD matures. I get only a small amount of interest on my "what if I get fired and need to eat for 3 months until the next CD matures?" fund, sitting in my checking account.) I never bother with actual savings accounts because in a year or two interest rates will be back down to 0.0000001% or whatever, in which case just holding the cash in my brokerage account is easier. (At least it gets swept into an overnight account that earns 0.0000015% interest! Wow!)
- tmpz22 3y ago
  I had the Uber credit card which at launch had something like 4% cashback at restaurants/bars/uber trips. Uber progressively slashed the benefits overtime to the point where it just had some generic 1% cashback. That was through Barclays and eventually they shipped me some vanilla master card with no benefits. I hope the Apple card doesn't follow a similar path.
  - ianhawes 3y ago
    Ah yes I remember the black Uber card. IIRC you got $50 annually for subscription services along with some other unheard of perks.
- paxys 3y ago
  They will find another bank to back them (hopefully Chase), and most customers won't realize the difference.
- astura 3y ago
  This is largely not a big deal - credit cards move to new servicers all the time, the customers are just transferred and you get a new card. In the last 10 years the Costco credit card used to be serviced by AMEX but now it's Citibank. Fidelity credit card moved from FIA Card Services (Bank of America subsidiary) to Elan Financial and became a Visa. The AARP credit card went from Chase to Barclays. Those are just off the top of my head.
balderdash 3y ago
I’m curious why Apple is moving to terminate as opposed to getting GS to buy them out of their contract?
- temende 3y ago
  One possible reason is that Apple wants to build more fintech products that they still need a banking partner for, and don't want to launch anything new with Goldman since they know the partnership hasn't worked out. So it may just be easier to start the process to find a new partner so you don't slow down product launches. Source: pure speculation
- dimmke 3y ago
  My theory about the Apple Card: Goldman Sachs is not setup to be a direct consumer bank. This caused a lot of problems: * The ease of sign up / approval led to a lot of subprime approvals that might not have gone through with a more established lender. Not only did this cause GS to lose money on delinquent accounts, it prevented the Apple Card from ever becoming a status symbol. * Goldman Sachs developed a reputation for almost never backing up cardholders in the case of dicey/fraudulent charges.The sense of security is a huge part of why people use a credit card for purchases. I myself terminated my Apple Card account over this. * The card itself was just not competitive in terms of rewards. The UI/UX of the app and the deeper integration into the Apple ecosystem was nice... (if a bit confusing) but when I moved over to Chase I found myself not really missing it at all. * Edit: Forgot one additional thing. Apple Card did not have contactless (tap) technology because they wanted to promote using Apple Pay. But whipping out your phone sucks compared to just tapping your card against a reader. All I wanted was a simple, easy credit card. I didn't care about minmaxing bonuses etc... but when I moved over to Chase I realized I had been leaving a lot of money on the table. All the other players but especially Chase and AMEX have very established reward systems setup. It's possible that Apple wants to move banks specifically because they want to reposition the card and need a different partner to do it with.
  - function_seven 3y ago
    I didn't know about the rep GS has gotten regarding fraud charges. My main card is a Chase one as well. Everything else is spot on. I use the Apple Card only for buying stuff from Apple (for the 3% cash back), or when I accidentally select it from my watch at the vending machine. Rewards are much better on other cards, even if they're not as simple as cash dropped into your account on the daily.
giobox 3y ago
Seemingly both sides have wanted out of this deal, earlier in the year there was another WSJ report with Goldman wanting to end it as well: > https://www.wsj.com/articles/goldman-is-looking-for-a-way-out-of-its-partnership-with-apple-79849a91 https://www.wsj.com/articles/goldman-is-looking-for-a-way-ou... The earlier story from June suggested Amex might take it over.
- rtpg 3y ago
  My bet is more that GS wanted out, and Apple wants to save face because "the leads we brought GS have double the default rate of other cards" is a bad look for future partners.
  - georgespencer 3y ago
    > Apple wants to save face because "the leads we brought GS have double the default rate of other cards" is a bad look for future partners. Pretty sure I must be misunderstanding you. Do you really mean to suggest that Apple's reaction to Goldman breaking up with them was to start briefing the press that they dumped Goldman first with the intention of somehow hiding or diluting the poor default performance of the card? 0. Do you mean charge off, or default, or delinquency? I think you mean charge off rate, so I'll address that, but let me know if not - you did say "default rate", which is almost always higher than net charge off (default is whenever a consumer fails to pay on time, net charge off is effectively bad debt hitting 6 months of arrears: after six months it's unlikely to be defrayed without debt recovery action). Anyway, assuming you meant net charge off: 1. Apple cannot possibly avoid disclosing the charge off rate of this program to potential partners during diligence. (Quite the opposite of a cover-up, the commercial agreement between Apple and any new partner will likely attempt to explicitly codify management's representations on this metric, and scope what happens if performance is not as described. Other than aggregate balance information I cannot think of a more important metric for an interested party to understand, nor one more likely to result in the demise of the agreement and fixed penalties for misrepresentation if it is presented deceptively.) 2. More importantly, the information you seem to think Apple is preoccupied with keeping out of the public eye appears to be publicly available in Goldman's SEC filings.[^1] 3. More importantly still, Apple is understood to have made several stipulations of Goldman at the outset of the deal which are likely to contribute to higher than average charge off rates: firstly, Apple and Goldman do not pursue debt recovery as aggressively as other card issuers, which is meaningful given that charge offs, unlike defaults, are judged over 6 months. Secondly, Apple seems to have encouraged Goldman to "get to a yes" on lending to individuals who otherwise may not have qualified for a credit card. (Low credit scores, high risk demographics.) These are likely to be points of negotiation with any new partner, but it's trivial to see why Apple card's net charge off rate (2.93%) is in line with subprime cards like Capital One (2.2%) rather than JP Morgan's 1.47% and BoA's 1.6% when you consider that they deliberately accept high risk profiles and deliberately avoid pursuing them as robustly as JP Morgan and co. (BTW, saying "[Apple card customers] have double the default rate of other cards" seems misleading to me – I can only find one such example, and it requires me to round up to 2x, but I may not have the same data as you? I think this should at most be "some other cards", given that e.g. Discover is significantly higher than Apple at 3.5%…) 4. There's some evidence to suggest that net charge offs spike during the infancy of new lending programs like Apple card, because net charge offs spike when individual consumers get new credit cards (for a lot of reasons), before cohorts mature and a steady state performance is reached. (This is also a consideration in multiple predictive models aiming to forecast net charge-off rates.) These are the good (to me) reasons that Apple is unlikely to be attempting to spin a yarn to the press to "save face". Without any inside information, I can also see reasons to believe that Apple did terminate the relationship with Goldman proactively, although it seems to be indisputable that Goldman was attempting to exit the business: a. It has been widely reported that the risk and ADM logic was so poor at launch that Tim Cook was unable to qualify for a card. This is not great for Apple's image. b. There were multiple horror stories in the press about various forms of prejudicial evaluations: DHH's partner springs to mind. This is not great for Apple's image, particularly when they were preoccupied with making Apple card accessible to the widest possible range of consumers (i.e. high risk). c. Goldman screwed up withdrawals so badly that Apple began issuing $100 "gifts" to people's accounts as compensation. This is not great for Apple's image. d. Goldman's infrastructure is inflexible and Apple negotiated weird consumer-centric benefits (e.g. bills at the start of the month, not on a rolling basis: Goldman's customer support teams reportedly can't cope with this concentration of demand). Apple does not play particularly well with others on matters like this. e. *Edit:* Totally forgot to add that Goldman's consumer credit division is literally being investigated by the CFPB "and other governmental bodies relating to investigations and/or inquiries concerning GS Bank USA’s credit card account management practices." Cool. Finally, I'd say that Goldman's inner turmoil and urgent desire to exit its consumer businesses is another reason for Apple to want to get out early: consumer has been an unmitigated disaster for Goldman, racking up billions of losses/write-downs, prompting a very embarrassing strategic retreat and eroding much of shareholders' confidence in David Solomon. I can't think of many reasons why Apple would want to continue the agreement through 2029, particularly given that Goldman somewhat publicly shopped the sale of the program to American Express. Goldman Sachs is not very good at consumer banking and does not want to do it. That makes them a lousy partner for Apple's consumer banking proposition, and I suspect this story is exactly what it sounds like: Apple putting Goldman out of their misery. [^1]: https://www.sec.gov/Archives/edgar/data/886982/000088698223000003/gs-20221231.htm https://www.sec.gov/Archives/edgar/data/886982/0000886982230... p168, states the net charge off ratio on consumer credit cards to be 2.8%.
cpncrunch 3y ago
This article is paywalled, with no way to bypass. Non-paywalled summary here: https://www.theverge.com/2023/11/28/23980261/apple-is-reportedly-moving-toward-ending-its-partnership-with-goldman-sachs https://www.theverge.com/2023/11/28/23980261/apple-is-report... Can I assume everyone commenting here has a WSJ subscription?
- s3p 3y ago
  Not me! I didn't read the article. Thanks for the summary.
- geodel 3y ago
  > Can I assume everyone commenting here has a WSJ subscription? Nope. But you can assume more often than people on internet comment based on just reading headline / TLDR summary or maybe first paragraph and then jump on to commenting. And I may just do same as my apple news+ subscription expired last week. I didn't feel too motivated to pay increased monthly sub with no annual option to save a few bucks.
- herpdyderp 3y ago
  I didn't read it but am still participating. Since I've been aware of this story for quite some time, the fact that it finally happened is all that really matters to me (which the headline covers, assuming it's correct). I probably know all the details already, unless something really unexpected happened.
  - quickthrowman 3y ago
    > I probably know all the details already, unless something really unexpected happened. There was a late addenda to the agreement; as a concession on behalf of Goldman Sachs, David Solomon agreed to DJ at Tim Cook’s eventual retirement party (for half of his normal fee).
- mikequinlan 3y ago
  >Can I assume everyone commenting here has a WSJ subscription? I was able to read it fine with the current version of the Bypass Paywalls chrome extension. https://gitlab.com/magnolia1234/bypass-paywalls-chrome-clean https://gitlab.com/magnolia1234/bypass-paywalls-chrome-clean
johnbatin 3y ago
Unsurprising since we've heard about this in the past. I wonder if there is another issuer(s) lined up for the card and the savings account. The savings account doesn't have the highest interest rates, but I like how my Apple Card cashback can go right into the savings account. It's kind of like a set it and forget it type of thing. I'm hoping this isn't the end of the Apple Card or the savings account though. It's nice getting 2% CB on Apple Pay and 3% on Apple products.
- ceejayoz 3y ago
  2% on everything - no Apple Pay required - is widely available. Citi, Wells Fargo, and PayPal each have a 2% no-annual-fee card. It's not that hard to get 5% back on Apple products if you're willing to buy Apple gift cards from a grocery store, either.
  - 404mm 3y ago
    Yup, grocery store or a book store. I agree, those benefits are easily obtainable elsewhere. I do like the automatic 0% interest on all Apple purchases. Not that I need it but it’s nice to keep the money if there is no reason to pay all upfront. Everybody mentions the positive features about Apple Card, but I’d like to point out that besides the really good cash back, the card is quite bare bones. No extended/doubled warranty on purchases, no purchase return protection, no device drop protection..
- chrisfinazzo 3y ago
  Ending the savings account would be a real shame - I never asked for a physical card, so all Apple Card transactions go through Apple Pay before landing in that account. Getting (effectively) 6% back on everything is a real boon. I know there are even higher rates out there, but this feels so effortless that I would hate to see it go away.
  - ericpauley 3y ago
    You’re not getting 6% on everything, not even close. Assuming the 1% back goes into savings and you wait a year, you’ll get 1.05% back.
Ajay-p 3y ago
I only got the card because I wanted a neat piece of titanium. I used it a few times and then cancelled it. Was I the only one?
- flwjliwjle 3y ago
  I tried to use it a few times and then cancelled it. It got declined a lot and no explanation was ever given.
  - tristanb 3y ago
    I've had it since it launched. I make thousands of transactions a month. I've never had a decline.
    - bigyikes 3y ago
      Now I wanna know how you make thousands of transactions a month. Even 1000 per month would be 30+ transactions per day?
      - r00fus 3y ago
        I read that as "thousands in transactions / month" which is easily done.
    - mi_lk 3y ago
      Thousands? What do you buy if you don't mind sharing?
- nickthegreek 3y ago
  Came for the physical card, stayed for the Daily Cash back/applepay on the watch.
  - fastball 3y ago
    You can use all your cards you've setup in ApplePay on the watch.
flwjliwjle 3y ago
Good. They should shut down the whole Apple Card program. It was awful. I had an Apple card for two months. In those two months, I had more inexplicably declined transactions than in the other twenty years with other cards combined. Every single time I called support and Goldman Sachs pointed at Apple and Apple pointed at Goldman Sachs and the problem never got resolved. They both did an astonishingly bad job.
- deleted 3y ago
  [deleted]
- tristanb 3y ago
  I replied to your other comment - I've not had this experience. Its been a rarely positive fintech experience for me.
- herpdyderp 3y ago
  I had some issues at launch with the service rejecting billing addresses but that was ironed out in the first month or so. Since then it's been flawless for me. Way better than all of my other banking services.
  - jkubicek 3y ago
    Same. I do occasionally get weird declines, but it's pretty rare. My Apple Card is the only one I reliably use and I've used it thousands of times since 2019, so I've got a pretty solid hit rate.
- themadturk 3y ago
  Though my use has been fairly limited (Apple isn't inclined to decline their own card), I've never had a problem with the Apple card, either at my Toyota dealership or at Walmart.
- reilly3000 3y ago
  I faced random declines at some merchants. It was like certain terminals couldn’t process it. They worked fine with Apple Pay with other accounts. Ace Hardware was one of them, but it eventually started working when there was a 3% cash back promotion.
arthurofbabylon 3y ago
Goldman Sachs’s customer service was surprisingly bad – I imagine that factor alone is a sufficient threat to Apple’s brand, worthy of terminating the arrangement.
- buildbot 3y ago
  Yeah I had an awful experience working with them - which is confusing to consumers I’m sure when the text chat is literally addressed to Apple through iMessage and GS just takes over from that.
  - FireBeyond 3y ago
    Certainly for some things (credit line increases) they make it very clear in the app that you "are being sent to our partners at Goldman" in the support messages.
  - morpheuskafka 3y ago
    I think the opposite is true, people think Apple is the lender and have no idea who GS Bank is even thought it’s literally in huge type on the card. If you look at r/AppleCard people are constantly complaining about “Apple” doing something they don’t like with their account.
    - em500 3y ago
      Their entire marketing shtick is that you're getting an Apple Card, rather than any random MasterCard or GS card. Just look at this page https://www.apple.com/apple-card/ https://www.apple.com/apple-card/, if they brand it so prominently as their own, they should also own the problems.
- ceejayoz 3y ago
  Yeah, there's a /r/AppleCard on Reddit and it was full of examples of reps just making shit up. Completely false information pulled out of their asses.
  - 3y ago
EMCymatics 3y ago
Sounded like a forced marriage
- geodel 3y ago
  But not a nasty divorce now.
  - EMCymatics 3y ago
    It's ok they called off the wedding.
deleted 3y ago
[deleted]
paxys 3y ago
This is probably a death knell for Goldman's entire consumer banking division. Ever single one of their products (including the Marcus savings account, which is now the sole remaining one) has been a costly failure.
- odiroot 3y ago
  They went very aggressively with Marcus offering here in UK. Had the most attractive rates for savings and ISAs for a time. And then... they just gave up? Their Android app was actually quite nice.
- 0cf8612b2e1e 3y ago
  Are there any alternatives to Marcus? It has felt like too good of a deal to last.
  - smugma 3y ago
    Betterment and Wealthfront both offer higher rates than Marcus. 4.75-5%. They also have higher FDIC limits due to how they spread your money.
  - deleted 3y ago
    [deleted]
  - Covzire 3y ago
    I'm currently seeing 5.05% APY from a CITbank savings account.
    - hellcow 3y ago
      Careful with them. They keep you at a high APY for a period of time, then they silently drop your interest rate and create a new "type" of savings account for new customers which offers the proper high rate -- you have to notice they did this, since they deliberately don't alert you. They do this over and over again. When I saw what they were doing, I withdrew all my money, and they even built a little popup into their mobile app... "Stay and we'll give you the rate we promised you all this time!" I don't have the time or patience for Comcast-style tactics with my savings account. I moved it into Robinhood Gold and am getting 5%, fully insured, with no stress about them trying to screw me over with an account shell game.
biglyburrito 3y ago
Paywall.
jkubicek 3y ago
Apple News subscribers can read for free here: https://apple.news/AUUOrnDm9QTiEj7T66kNLmg https://apple.news/AUUOrnDm9QTiEj7T66kNLmg
- jayveeone 3y ago
  Thank you!
TechRemarker 3y ago
Every single experience with GS support for the Apple Card has been at Comcast level. From the first experience to years later. Notably the message experience which may be more on Apple, where it's not email, but it's not also a chat, but something in between where you can wait as long as an email to hear back, but when you do, if you don't respond as quickly like a chat it ends it without telling you other than when you reply it starts all over again. Such a nightmare.
- r00fus 3y ago
  I was a big proponent (despite the Goldman Sachs vampire squid connections) for months and then all of a sudden they lost my bank details for making payments and I got charged a late fee + interest (has never happened for like decade+ on other cards) - customer service refused to reverse the charge and I quit cold turkey. The hiding your CC# feature is cool, the card is unique looking (but I use Apple Watch Pay most times anyway) and the 3% extra off Apple products is a good retailer specific feature, but not my daily driver anymore. Not sure I'll miss it if they switch to an even less savory servicer.
- jeffbee 3y ago
  GS support for Apple Card made me change my Apple ID password to get my card unlocked (after it was wrongly locked for transactions in France while I was in France, which I though was THE ENTIRE POINT of Apple Card, that the fraud signals were tied to my iPhone) and that made it impossible to continue the chat!
pram 3y ago
I’ve mostly been wondering when the 0% interest 12 month financing for stuff was going to go away. That was the only thing I’ve used it for.
m-ahmed 3y ago
They must have secured a separate partner. While I primarily use Amex and love their service, I’d prefer it isn’t them. Apple Card being a Mastercard with no foreign transaction fees serves me well when I visit Canada.
smartbit 3y ago
https://archive.is/ShGa2 https://archive.is/ShGa2
DeathArrow 3y ago
[flagged]

266 points by voisin 3y ago

Good. I'm surprised they even picked a bank with such a controversial history and track record. They're pretty much the Palantir of the financial sector. No way I'd ever do business with them.

elzbardico 3y ago
Nah. Every bank is the same. All of them are of full of skeletons on their closets. Banks are pretty shady business but have power enough to lobby their get-out-of-jail card and codify it in law.

deleted 3y ago

[deleted]

not-my-account 3y ago

Hm, what would this mean for Apple Card users? Would it be shut down? How about those who have Apple Savings Accounts?[0] [0] https://www.apple.com/newsroom/2023/04/apple-cards-new-high-yield-savings-account-is-now-available-offering-a-4-point-15-percent-apy/ https://www.apple.com/newsroom/2023/04/apple-cards-new-high-...

arcdigital 3y ago
I'm assuming it will be just like any other time a card portfolio is sold or transferred (Costco Card: Amex -> Citi, REI Card: US Bank -> Capital One, GM Card: Capital One -> Marcus (which is Goldman, ironically I think they want to get rid of this card too), etc...). Unless Apple discontinues the card completely, they will choose a new bank, that bank will take on the existing portfolio, everyone will get new cards (maybe numbers depending on how they did the BINs)...but with the physical card not having a visible number, the apple pay card being able to be automatically updated, and the virtual card's number being right there in the app it should be pretty painless. Since Apple manages the whole thing through their own app and not a Goldman Sachs app, it should be fairly seamless as everything should look the same and you won't need to make a new login or worry about how to start paying a new bank. If there's new cards to be issued it's likely it will just show up in the Wallet app and they'll mail you a new physical one. Last year Apple moved the Apple Cash card from Discover to Visa and most people didn't even know that happened. There was even a button to switch it over sooner if you wanted to. With the Savings Account I expect it will be similar as long as they can find a bank willing to offer a similar APY. Especially for people who just use it with the Apple Card and don't deposit directly to it using the routing/account number, you probably won't really notice. source: all speculation, but I have worked extensively in payments for years and have launched banking products.
- toomuchtodo 3y ago
  Great benefits for Apple Card users to have Apple abstract all the drudgery away. Experience is the differentiator, back office is a commodity. What’s left is to make Apple Cash a deposit account with FedNow instant payment rails access. Buy a distressed regional bank to get a charter if needed. Every iPhone user then becomes a potential banking customer (136M US iPhone users, compared to 66M JPMC household customers, for example). Interchange revenue will slowly decline (again, FedNow), which Apple can compensate for with the deposit spread.
  - CydeWeys 3y ago
    There are lots of downsides to actually becoming a bank, though. It creates many restrictions on the kinds of things you can do, and unless it's the majority of your business, it's not something you want. Better to work with banks but not be a bank yourself.
    - toomuchtodo 3y ago
      I suppose it’s going to depend on how many willing partners are out there with an appetite to be beholden to Big Tech as the smaller partner with less leverage. Evolve just dumped a bunch of fintech partners over the last year (conversely, they were aggressive in who they were willing to partner with), and moving is not trivial. While Apple has deep pockets, I’m sure engineering time is better spent delighting users vs engineering around partner churning. https://fintechbusinessweekly.substack.com/p/evolves-problematic-partners-bankruptcies https://fintechbusinessweekly.substack.com/p/evolves-problem...
      - posguy 3y ago
        Depends if Apple really feels they can run a backoffice banking arm effectively and cheaper than a partner that is already at scale. Underwriting credit & customer risk, handling edge cases, maintaining relationships with ATM networks, card networks and ensuring compliance with state and federal banking rules is quite an undertaking. Goldman Sachs did not have scale like Chase, Capital One and others to create a diversified portfolio of clients, limiting their ability to hedge against the risks of a single platform or two dominating their involvement in this market. One bad software update by Apple could flood their support queues, and they can't afford to keep significant staff on hand to keep wait times below an hour (unlike a larger company, who is already staffed up to serve their non-Apple customers).
parl_match 3y ago
The rumor is that Apple Card will move to Amex. WSJ says 12-15 months, but AppleCard is contractually obligated to use the MC network until 2025. I can't imagine they'll close all those accounts, so likely we'll see some sort of migration leading up.
- giobox 3y ago
  This would be a bit of a detractor for me, Amex is not as widely accepted, especially when traveling in Europe. Mastercard is accepted virtually everywhere in the EU and UK.
  - wdb 3y ago
    Yeah, I had an Amex card and it was pretty useless in Europe. Admittingly that was more than five years ago so maybe things have improved by now.
    - giobox 3y ago
      The fact the Apple card was a Mastercard and had no foreign transaction fees was largely the only reason I opened it, as I too find my Amex a pain in the ass in Europe. If it does become an Amex card, I will likely close the account.
      - ghaff 3y ago
        For me, Apple Card is mostly only interesting for the discount on Apple. I carry it as a backup otherwise but don't use it.
      - throwaway2037 3y ago
        no foreign transaction fees In an FX transaction, what is the difference between a trading fee and a wider spread? Nothing. (Why do people keep falling for this?) What you really want to see is a combined promise. For example: No fees, plus 1% or less FX spread on major currencies. (My preferred credit card promises that.) Honestly, it is very hard to pay a total of less than 1% on foreign transactions. Still, this is pretty cheap, given the convenience.
deleted 3y ago
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malwarebytess 3y ago
I'm more interested in the savings account integration. I've found it super convenient. Too low APR for long term savings, but the convenience is worth the difference to me for short term savings parking. I keep $30K or so in it revolving for moving money around. Not to mention the cashback deposit right to the account.
- herpdyderp 3y ago
  > Too low APR for long term savings What APR is your baseline for long term savings? I'm interested in where you see significantly higher APR savings accounts because the Apple Card Savings Account is 400x my previous savings account APR.
  - 3-cheese-sundae 3y ago
    As of this writing, Ally is still higher than Apple Savings account (4.25% APY vs 4.15% APY)
  - function_seven 3y ago
    It's way better than my previous savings account as well, but still about 0.5-0.75 points lower than a couple of CDs that I have. Not sure if that counts as significant or not, but I figure it adds up. Apple Savings: 4.15% CIT Bank 6-Mo CD: 4.88% CIT Bank 18-Mo CD: 4.5% I think?
  - jrockway 3y ago
    I don't have a savings account but buy CDs on a regular basis. For the next two years, I have something between 5% and 6% maturing every 3 months. Apple Card Savings is 4.15%. So you can definitely do better than the Apple Card, but to some extent you're paying bankers to do what I do manually every 3 months. (You just pay them in "spread"; they're buying the same CDs I am, but keeping some of the profits to themselves. And letting you withdraw the money whenever you want, not just when the underlying CD matures. I get only a small amount of interest on my "what if I get fired and need to eat for 3 months until the next CD matures?" fund, sitting in my checking account.) I never bother with actual savings accounts because in a year or two interest rates will be back down to 0.0000001% or whatever, in which case just holding the cash in my brokerage account is easier. (At least it gets swept into an overnight account that earns 0.0000015% interest! Wow!)
tmpz22 3y ago
I had the Uber credit card which at launch had something like 4% cashback at restaurants/bars/uber trips. Uber progressively slashed the benefits overtime to the point where it just had some generic 1% cashback. That was through Barclays and eventually they shipped me some vanilla master card with no benefits. I hope the Apple card doesn't follow a similar path.
- ianhawes 3y ago
  Ah yes I remember the black Uber card. IIRC you got $50 annually for subscription services along with some other unheard of perks.
paxys 3y ago
They will find another bank to back them (hopefully Chase), and most customers won't realize the difference.
astura 3y ago
This is largely not a big deal - credit cards move to new servicers all the time, the customers are just transferred and you get a new card. In the last 10 years the Costco credit card used to be serviced by AMEX but now it's Citibank. Fidelity credit card moved from FIA Card Services (Bank of America subsidiary) to Elan Financial and became a Visa. The AARP credit card went from Chase to Barclays. Those are just off the top of my head.

balderdash 3y ago

I’m curious why Apple is moving to terminate as opposed to getting GS to buy them out of their contract?

temende 3y ago
One possible reason is that Apple wants to build more fintech products that they still need a banking partner for, and don't want to launch anything new with Goldman since they know the partnership hasn't worked out. So it may just be easier to start the process to find a new partner so you don't slow down product launches. Source: pure speculation
dimmke 3y ago
My theory about the Apple Card: Goldman Sachs is not setup to be a direct consumer bank. This caused a lot of problems: * The ease of sign up / approval led to a lot of subprime approvals that might not have gone through with a more established lender. Not only did this cause GS to lose money on delinquent accounts, it prevented the Apple Card from ever becoming a status symbol. * Goldman Sachs developed a reputation for almost never backing up cardholders in the case of dicey/fraudulent charges.The sense of security is a huge part of why people use a credit card for purchases. I myself terminated my Apple Card account over this. * The card itself was just not competitive in terms of rewards. The UI/UX of the app and the deeper integration into the Apple ecosystem was nice... (if a bit confusing) but when I moved over to Chase I found myself not really missing it at all. * Edit: Forgot one additional thing. Apple Card did not have contactless (tap) technology because they wanted to promote using Apple Pay. But whipping out your phone sucks compared to just tapping your card against a reader. All I wanted was a simple, easy credit card. I didn't care about minmaxing bonuses etc... but when I moved over to Chase I realized I had been leaving a lot of money on the table. All the other players but especially Chase and AMEX have very established reward systems setup. It's possible that Apple wants to move banks specifically because they want to reposition the card and need a different partner to do it with.
- function_seven 3y ago
  I didn't know about the rep GS has gotten regarding fraud charges. My main card is a Chase one as well. Everything else is spot on. I use the Apple Card only for buying stuff from Apple (for the 3% cash back), or when I accidentally select it from my watch at the vending machine. Rewards are much better on other cards, even if they're not as simple as cash dropped into your account on the daily.

giobox 3y ago

Seemingly both sides have wanted out of this deal, earlier in the year there was another WSJ report with Goldman wanting to end it as well: > https://www.wsj.com/articles/goldman-is-looking-for-a-way-out-of-its-partnership-with-apple-79849a91 https://www.wsj.com/articles/goldman-is-looking-for-a-way-ou... The earlier story from June suggested Amex might take it over.

rtpg 3y ago
My bet is more that GS wanted out, and Apple wants to save face because "the leads we brought GS have double the default rate of other cards" is a bad look for future partners.
- georgespencer 3y ago
  > Apple wants to save face because "the leads we brought GS have double the default rate of other cards" is a bad look for future partners. Pretty sure I must be misunderstanding you. Do you really mean to suggest that Apple's reaction to Goldman breaking up with them was to start briefing the press that they dumped Goldman first with the intention of somehow hiding or diluting the poor default performance of the card? 0. Do you mean charge off, or default, or delinquency? I think you mean charge off rate, so I'll address that, but let me know if not - you did say "default rate", which is almost always higher than net charge off (default is whenever a consumer fails to pay on time, net charge off is effectively bad debt hitting 6 months of arrears: after six months it's unlikely to be defrayed without debt recovery action). Anyway, assuming you meant net charge off: 1. Apple cannot possibly avoid disclosing the charge off rate of this program to potential partners during diligence. (Quite the opposite of a cover-up, the commercial agreement between Apple and any new partner will likely attempt to explicitly codify management's representations on this metric, and scope what happens if performance is not as described. Other than aggregate balance information I cannot think of a more important metric for an interested party to understand, nor one more likely to result in the demise of the agreement and fixed penalties for misrepresentation if it is presented deceptively.) 2. More importantly, the information you seem to think Apple is preoccupied with keeping out of the public eye appears to be publicly available in Goldman's SEC filings.[^1] 3. More importantly still, Apple is understood to have made several stipulations of Goldman at the outset of the deal which are likely to contribute to higher than average charge off rates: firstly, Apple and Goldman do not pursue debt recovery as aggressively as other card issuers, which is meaningful given that charge offs, unlike defaults, are judged over 6 months. Secondly, Apple seems to have encouraged Goldman to "get to a yes" on lending to individuals who otherwise may not have qualified for a credit card. (Low credit scores, high risk demographics.) These are likely to be points of negotiation with any new partner, but it's trivial to see why Apple card's net charge off rate (2.93%) is in line with subprime cards like Capital One (2.2%) rather than JP Morgan's 1.47% and BoA's 1.6% when you consider that they deliberately accept high risk profiles and deliberately avoid pursuing them as robustly as JP Morgan and co. (BTW, saying "[Apple card customers] have double the default rate of other cards" seems misleading to me – I can only find one such example, and it requires me to round up to 2x, but I may not have the same data as you? I think this should at most be "some other cards", given that e.g. Discover is significantly higher than Apple at 3.5%…) 4. There's some evidence to suggest that net charge offs spike during the infancy of new lending programs like Apple card, because net charge offs spike when individual consumers get new credit cards (for a lot of reasons), before cohorts mature and a steady state performance is reached. (This is also a consideration in multiple predictive models aiming to forecast net charge-off rates.) These are the good (to me) reasons that Apple is unlikely to be attempting to spin a yarn to the press to "save face". Without any inside information, I can also see reasons to believe that Apple did terminate the relationship with Goldman proactively, although it seems to be indisputable that Goldman was attempting to exit the business: a. It has been widely reported that the risk and ADM logic was so poor at launch that Tim Cook was unable to qualify for a card. This is not great for Apple's image. b. There were multiple horror stories in the press about various forms of prejudicial evaluations: DHH's partner springs to mind. This is not great for Apple's image, particularly when they were preoccupied with making Apple card accessible to the widest possible range of consumers (i.e. high risk). c. Goldman screwed up withdrawals so badly that Apple began issuing $100 "gifts" to people's accounts as compensation. This is not great for Apple's image. d. Goldman's infrastructure is inflexible and Apple negotiated weird consumer-centric benefits (e.g. bills at the start of the month, not on a rolling basis: Goldman's customer support teams reportedly can't cope with this concentration of demand). Apple does not play particularly well with others on matters like this. e. *Edit:* Totally forgot to add that Goldman's consumer credit division is literally being investigated by the CFPB "and other governmental bodies relating to investigations and/or inquiries concerning GS Bank USA’s credit card account management practices." Cool. Finally, I'd say that Goldman's inner turmoil and urgent desire to exit its consumer businesses is another reason for Apple to want to get out early: consumer has been an unmitigated disaster for Goldman, racking up billions of losses/write-downs, prompting a very embarrassing strategic retreat and eroding much of shareholders' confidence in David Solomon. I can't think of many reasons why Apple would want to continue the agreement through 2029, particularly given that Goldman somewhat publicly shopped the sale of the program to American Express. Goldman Sachs is not very good at consumer banking and does not want to do it. That makes them a lousy partner for Apple's consumer banking proposition, and I suspect this story is exactly what it sounds like: Apple putting Goldman out of their misery. [^1]: https://www.sec.gov/Archives/edgar/data/886982/000088698223000003/gs-20221231.htm https://www.sec.gov/Archives/edgar/data/886982/0000886982230... p168, states the net charge off ratio on consumer credit cards to be 2.8%.

cpncrunch 3y ago

This article is paywalled, with no way to bypass. Non-paywalled summary here: https://www.theverge.com/2023/11/28/23980261/apple-is-reportedly-moving-toward-ending-its-partnership-with-goldman-sachs https://www.theverge.com/2023/11/28/23980261/apple-is-report... Can I assume everyone commenting here has a WSJ subscription?

s3p 3y ago
Not me! I didn't read the article. Thanks for the summary.
geodel 3y ago
> Can I assume everyone commenting here has a WSJ subscription? Nope. But you can assume more often than people on internet comment based on just reading headline / TLDR summary or maybe first paragraph and then jump on to commenting. And I may just do same as my apple news+ subscription expired last week. I didn't feel too motivated to pay increased monthly sub with no annual option to save a few bucks.
herpdyderp 3y ago
I didn't read it but am still participating. Since I've been aware of this story for quite some time, the fact that it finally happened is all that really matters to me (which the headline covers, assuming it's correct). I probably know all the details already, unless something really unexpected happened.
- quickthrowman 3y ago
  > I probably know all the details already, unless something really unexpected happened. There was a late addenda to the agreement; as a concession on behalf of Goldman Sachs, David Solomon agreed to DJ at Tim Cook’s eventual retirement party (for half of his normal fee).
mikequinlan 3y ago
>Can I assume everyone commenting here has a WSJ subscription? I was able to read it fine with the current version of the Bypass Paywalls chrome extension. https://gitlab.com/magnolia1234/bypass-paywalls-chrome-clean https://gitlab.com/magnolia1234/bypass-paywalls-chrome-clean

johnbatin 3y ago

Unsurprising since we've heard about this in the past. I wonder if there is another issuer(s) lined up for the card and the savings account. The savings account doesn't have the highest interest rates, but I like how my Apple Card cashback can go right into the savings account. It's kind of like a set it and forget it type of thing. I'm hoping this isn't the end of the Apple Card or the savings account though. It's nice getting 2% CB on Apple Pay and 3% on Apple products.

ceejayoz 3y ago
2% on everything - no Apple Pay required - is widely available. Citi, Wells Fargo, and PayPal each have a 2% no-annual-fee card. It's not that hard to get 5% back on Apple products if you're willing to buy Apple gift cards from a grocery store, either.
- 404mm 3y ago
  Yup, grocery store or a book store. I agree, those benefits are easily obtainable elsewhere. I do like the automatic 0% interest on all Apple purchases. Not that I need it but it’s nice to keep the money if there is no reason to pay all upfront. Everybody mentions the positive features about Apple Card, but I’d like to point out that besides the really good cash back, the card is quite bare bones. No extended/doubled warranty on purchases, no purchase return protection, no device drop protection..
chrisfinazzo 3y ago
Ending the savings account would be a real shame - I never asked for a physical card, so all Apple Card transactions go through Apple Pay before landing in that account. Getting (effectively) 6% back on everything is a real boon. I know there are even higher rates out there, but this feels so effortless that I would hate to see it go away.
- ericpauley 3y ago
  You’re not getting 6% on everything, not even close. Assuming the 1% back goes into savings and you wait a year, you’ll get 1.05% back.

Ajay-p 3y ago

I only got the card because I wanted a neat piece of titanium. I used it a few times and then cancelled it. Was I the only one?

flwjliwjle 3y ago
I tried to use it a few times and then cancelled it. It got declined a lot and no explanation was ever given.
- tristanb 3y ago
  I've had it since it launched. I make thousands of transactions a month. I've never had a decline.
  - bigyikes 3y ago
    Now I wanna know how you make thousands of transactions a month. Even 1000 per month would be 30+ transactions per day?
    - r00fus 3y ago
      I read that as "thousands in transactions / month" which is easily done.
  - mi_lk 3y ago
    Thousands? What do you buy if you don't mind sharing?
nickthegreek 3y ago
Came for the physical card, stayed for the Daily Cash back/applepay on the watch.
- fastball 3y ago
  You can use all your cards you've setup in ApplePay on the watch.

flwjliwjle 3y ago

Good. They should shut down the whole Apple Card program. It was awful. I had an Apple card for two months. In those two months, I had more inexplicably declined transactions than in the other twenty years with other cards combined. Every single time I called support and Goldman Sachs pointed at Apple and Apple pointed at Goldman Sachs and the problem never got resolved. They both did an astonishingly bad job.

deleted 3y ago
[deleted]
tristanb 3y ago
I replied to your other comment - I've not had this experience. Its been a rarely positive fintech experience for me.
herpdyderp 3y ago
I had some issues at launch with the service rejecting billing addresses but that was ironed out in the first month or so. Since then it's been flawless for me. Way better than all of my other banking services.
- jkubicek 3y ago
  Same. I do occasionally get weird declines, but it's pretty rare. My Apple Card is the only one I reliably use and I've used it thousands of times since 2019, so I've got a pretty solid hit rate.
themadturk 3y ago
Though my use has been fairly limited (Apple isn't inclined to decline their own card), I've never had a problem with the Apple card, either at my Toyota dealership or at Walmart.
reilly3000 3y ago
I faced random declines at some merchants. It was like certain terminals couldn’t process it. They worked fine with Apple Pay with other accounts. Ace Hardware was one of them, but it eventually started working when there was a 3% cash back promotion.

arthurofbabylon 3y ago

Goldman Sachs’s customer service was surprisingly bad – I imagine that factor alone is a sufficient threat to Apple’s brand, worthy of terminating the arrangement.

buildbot 3y ago
Yeah I had an awful experience working with them - which is confusing to consumers I’m sure when the text chat is literally addressed to Apple through iMessage and GS just takes over from that.
- FireBeyond 3y ago
  Certainly for some things (credit line increases) they make it very clear in the app that you "are being sent to our partners at Goldman" in the support messages.
- morpheuskafka 3y ago
  I think the opposite is true, people think Apple is the lender and have no idea who GS Bank is even thought it’s literally in huge type on the card. If you look at r/AppleCard people are constantly complaining about “Apple” doing something they don’t like with their account.
  - em500 3y ago
    Their entire marketing shtick is that you're getting an Apple Card, rather than any random MasterCard or GS card. Just look at this page https://www.apple.com/apple-card/ https://www.apple.com/apple-card/, if they brand it so prominently as their own, they should also own the problems.
ceejayoz 3y ago
Yeah, there's a /r/AppleCard on Reddit and it was full of examples of reps just making shit up. Completely false information pulled out of their asses.
- 3y ago

EMCymatics 3y ago

Sounded like a forced marriage

geodel 3y ago
But not a nasty divorce now.
- EMCymatics 3y ago
  It's ok they called off the wedding.

deleted 3y ago

[deleted]

paxys 3y ago

This is probably a death knell for Goldman's entire consumer banking division. Ever single one of their products (including the Marcus savings account, which is now the sole remaining one) has been a costly failure.

odiroot 3y ago
They went very aggressively with Marcus offering here in UK. Had the most attractive rates for savings and ISAs for a time. And then... they just gave up? Their Android app was actually quite nice.
0cf8612b2e1e 3y ago
Are there any alternatives to Marcus? It has felt like too good of a deal to last.
- smugma 3y ago
  Betterment and Wealthfront both offer higher rates than Marcus. 4.75-5%. They also have higher FDIC limits due to how they spread your money.
- deleted 3y ago
  [deleted]
- Covzire 3y ago
  I'm currently seeing 5.05% APY from a CITbank savings account.
  - hellcow 3y ago
    Careful with them. They keep you at a high APY for a period of time, then they silently drop your interest rate and create a new "type" of savings account for new customers which offers the proper high rate -- you have to notice they did this, since they deliberately don't alert you. They do this over and over again. When I saw what they were doing, I withdrew all my money, and they even built a little popup into their mobile app... "Stay and we'll give you the rate we promised you all this time!" I don't have the time or patience for Comcast-style tactics with my savings account. I moved it into Robinhood Gold and am getting 5%, fully insured, with no stress about them trying to screw me over with an account shell game.

biglyburrito 3y ago

Paywall.

jkubicek 3y ago

Apple News subscribers can read for free here: https://apple.news/AUUOrnDm9QTiEj7T66kNLmg https://apple.news/AUUOrnDm9QTiEj7T66kNLmg

jayveeone 3y ago
Thank you!

TechRemarker 3y ago

Every single experience with GS support for the Apple Card has been at Comcast level. From the first experience to years later. Notably the message experience which may be more on Apple, where it's not email, but it's not also a chat, but something in between where you can wait as long as an email to hear back, but when you do, if you don't respond as quickly like a chat it ends it without telling you other than when you reply it starts all over again. Such a nightmare.

r00fus 3y ago
I was a big proponent (despite the Goldman Sachs vampire squid connections) for months and then all of a sudden they lost my bank details for making payments and I got charged a late fee + interest (has never happened for like decade+ on other cards) - customer service refused to reverse the charge and I quit cold turkey. The hiding your CC# feature is cool, the card is unique looking (but I use Apple Watch Pay most times anyway) and the 3% extra off Apple products is a good retailer specific feature, but not my daily driver anymore. Not sure I'll miss it if they switch to an even less savory servicer.
jeffbee 3y ago
GS support for Apple Card made me change my Apple ID password to get my card unlocked (after it was wrongly locked for transactions in France while I was in France, which I though was THE ENTIRE POINT of Apple Card, that the fraud signals were tied to my iPhone) and that made it impossible to continue the chat!

pram 3y ago

I’ve mostly been wondering when the 0% interest 12 month financing for stuff was going to go away. That was the only thing I’ve used it for.

m-ahmed 3y ago

They must have secured a separate partner. While I primarily use Amex and love their service, I’d prefer it isn’t them. Apple Card being a Mastercard with no foreign transaction fees serves me well when I visit Canada.

smartbit 3y ago

https://archive.is/ShGa2 https://archive.is/ShGa2

DeathArrow 3y ago

[flagged]