Why Apple Is Reportedly Kicking Credit Card Partner Goldman Sachs To The Curb
by
Thiago Trevisan
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Wednesday, November 29, 2023, 11:13 AM EDT
Apple has been known to bring industry-changing products to market, such as the original iPod and iPhone. When it introduced the Apple Card in 2019, it made complete sense considering the retail eco-system that surrounds it. A further push into a vast services portfolio gave consumers another reason to consider sticking to the walled garden that Apple has created.
This particular foray may be on the rocks, as recent reports point to Apple ending its relationship with Goldman Sachs for its Apple Card. While it appeared that the relationship would be ongoing until 2029, the honeymoon may well be over within the next year.
The Apple Mac Pro, also introduced in 2019
Apple has its sure-fire products that are never going away, such as the iPhone, but it always has a few questionable long-term items in its stable. The Mac Pro, much like the Apple Card, always seems to be on the verge of an exit. What makes the Apple Card different is in its fairly wide adoption amongst many users, creating a symbiosis within the Apple eco-system.
Goldman Sachs has demonstrated some dissatisfaction with the consumer credit card relationship it has with Apple, likely due to the tight control Apple has over the terms. With a cloudy overall general economy that has seen average credit card balances grow, it makes sense for Goldman Sachs to want to exit such a risky environment.
Apple's description of some beneifts on Apple Card
Goldman Sachs is traditionally more comfortable with niche, higher return clients in its history. With Apple Card, however, emphasis on wide adoption and limits on where Goldman Sachs could profit have made it less appealing in a turbulent economic environment.
Apple wanted to have a consumer friendly credit card, which means it would forego some traditional money-making attributes on its Apple Card. For example, the Apple Card does not have late lees, foreign transaction fees, or annual fees. Together with a healthy daily cash back, it is an attractive option for the consumer. Pair that with the iOS ease of use and Titanium physical card, and it is not surprising this proved a popular option.
Apple also introduced a high interest rate savings account with Goldman Sachs, further enveloping users in its eco-system. It will be interesting to see how Apple pivots its Apple Card behind the scenes, as it would seem unlikely they want to completely get rid of it. A partnership change seems more probable (such as American Express), but if it will affect consumers in its feature-set is still unknown.
