Apple Card by Goldman Sachs

[NRB525]

The concept of users as a data mining resource applies to Google (Android) and Samsung, not to Apple.

Which is a large part of why I stick with iOS.

[Loquat]

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@CreditCuriosity wrote:

Card basically really stinks and can do alot better with whatever insert 2%-3% card here( although there are worse cards out there!).  I love apple products, but ya no need for this although I think it will do very good with non credit savoy people and people that are apple fan boys/girls

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@CreditCuriosity you nailed it!  You're absolutely right...folks buy Apple because it's Apple.  It doesn't have to make sense or be the most rewarding...it's Apple and that is all the justification that is needed and there's nothing wrong with that.  I'm the same way with certain product in my life...

[Anonymous]

"We still expect a large percentage of transactions to be done at the 1% return level (using the physical card) so we would expect the typical consumer to perceive the cash return rate to be OK but not great," the Goldman Sachs analysts say.

"...the card will probably have "little short term earnings impact" for Apple, according to the analysts."

https://www.cnbc.com/2019/03/26/goldman-analysts-are-underwhelmed-by-the-new-goldman-sachs-apple-car...

I don't think Apple is looking to make a killing here. I think they are testing the waters with a low-mid entry level card and planning on building off of it if its accepted. I don't think its far fetched to believe Apple will make its own "tech trifecta" in future years if this card is evenly mildly successful. That's when, I imagine, the higher level perks will enter. Apple's own "ultimate rewards" program letting you cash in points for apple care and accessories.

[wasCB14]

As far as buying electronics in general, I would need a pretty high rate of cash back to use a card that didn't offer price protection (which I'll assume Apple/GS will exclude). Maybe Apple products are different, but in my experience with consumer electronics there's not much I can buy that's not cheaper somewhere else within a few months.

[mongstradamus]

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@wasCB14 wrote:

As far as buying electronics in general, I would need a pretty high rate of cash back to use a card that didn't offer price protection (which I'll assume Apple/GS will exclude). Maybe Apple products are different, but in my experience with consumer electronics there's not much I can buy that's not cheaper somewhere else within a few months.

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To be fair a lot of credit cards have been getting rid of price protection on their cards. At the very least they have devalued their programs a certain amount.  TBH I don’t really find the appeal of the apple card other then it being an apple product. Heck I would rather get Amex BBR for 2x MR flat rate on everything. A lot of the supermarkets i shop at actually have removed android pay  and Apple Pay so ability to get even 2% cash back would be very problematic for me. 

Apple products at apple store usually never get price drops, so in theory you probably could buy apple related stuff somewhere else where you can get more than 3%. 

[Anonymous]

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@wasCB14 wrote:

As far as buying electronics in general, I would need a pretty high rate of cash back to use a card that didn't offer price protection (which I'll assume Apple/GS will exclude). Maybe Apple products are different, but in my experience with consumer electronics there's not much I can buy that's not cheaper somewhere else within a few months.

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This doesn’t happen often with Apple products. Outside of Black Friday and other holiday type deals, until Amazon became an Apple authorized reseller which has resulted in some nice price drops, Apple prices were relatively fixed across the board. Now it’s not uncommon to see deals but they tend to be relatively stable. So like the 2018 iPad went down to $249 for Black Friday and has stayed there. 

[longtimelurker]

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@Anonymous wrote:

"We still expect a large percentage of transactions to be done at the 1% return level (using the physical card) so we would expect the typical consumer to perceive the cash return rate to be OK but not great," the Goldman Sachs analysts say.

"...the card will probably have "little short term earnings impact" for Apple, according to the analysts."

https://www.cnbc.com/2019/03/26/goldman-analysts-are-underwhelmed-by-the-new-goldman-sachs-apple-card.html

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From that link:  "The Goldman analysts assumed that Apple Card will garner 21 million users who spend $1,000 a month, generating $882 million in revenue"

So don't know if that agrees with Apple's estimate, (or the GS people who did the partnership) but that's the best guess by the company analysts.  I assume 21M is pretty respectable!  (Article doesn't say how long till that though)

[Anonymous]

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@longtimelurker wrote:

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@Anonymous wrote:

"We still expect a large percentage of transactions to be done at the 1% return level (using the physical card) so we would expect the typical consumer to perceive the cash return rate to be OK but not great," the Goldman Sachs analysts say.

"...the card will probably have "little short term earnings impact" for Apple, according to the analysts."

https://www.cnbc.com/2019/03/26/goldman-analysts-are-underwhelmed-by-the-new-goldman-sachs-apple-card.html

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From that link:  "The Goldman analysts assumed that Apple Card will garner 21 million users who spend $1,000 a month, generating $882 million in revenue"

So don't know if that agrees with Apple's estimate, (or the GS people who did the partnership) but that's the best guess by the company analysts.  I assume 21M is pretty respectable!  (Article doesn't say how long till that though)

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21 million is insane. 

For reference, Wells Fargo only had 23 million total credit cards issued in 2017 and Citigroup had the most at 95 million — 21 million is a crazy high explosion. 

[Anonymous]

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@Anonymous wrote:

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@iced wrote:

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@Anonymous wrote:

If Apple makes a no fee card accessible to everyone, it will be ground breaking but let’s face it, Apple is a luxury brand and they want luxury customers. I would be blown away if they hand these out like candy. 

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A brand doesn't have ~42% share in any market (phones) by only targeting luxury customers.

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Not true. Very easy when you support 5 years of devices. Apple’s market share would be decimated if you just looked at X and newer. 

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Thats not apple to apples. You are comparing the X or newer to the entire Android line (which also supports at least 5 years of devices). If you compare X or new to the equivalent the market share would not be "decimated". Lets get back on topic 

Apple will make very little money from the card. Co-branded cards don't make money for the brand they make money for the bank.

Again this card is not about making money in the short term. Its about the app, the money management. Its about getting into the financial life of Generation Z. 

This is a generation that was about 11-12 when the financial crisis hit. They saw their parents lose their homes, jobs, and they blame the mortgage crisis and credit in general. Banks need this generation to start trusting lending again. Lending is how banks make money. Mortgages and credit cards are just different types of lending. 

Goldman Sachs is trying to use Apple to get access to a generation who does not want lending at all. Apple is using GS to get in another part of consumers lives. I think thats why they made a point of saying they are not mining any of your shopping data. (They don't need the scrutiny of someone questioning the implications of a company that has 42% of the population using their product all of sudden having access to that kind of data).

This time next year we will be talking about the new Samsung card. Because this is just the beginning of a new arms race.

btw you can use Apple Pay online. Even my utilities company takes Apple Pay.

[CAS2019]

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@Anonymous wrote:

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@CAS2019 wrote:

If the Apple cc will be only available to Apple iPhone users, they are going to be on a very slippery slope.  I saw on the news several months ago, Apple is losing favor with the younger generation, as they prefer the Android OS.  I can see Samsung entering this foray before too long.  I personally think this will be something of a dog and pony show in re to cc’s and Apple.

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If anything I can see this along with the redesign coming with iOS 13 as great ways to attract customers back to Apple and lock those of us who have stuck around through the iOS 11 and 12 mess even further into the ecosystem. 

Samsung was never attractive to me. I was an HTC fanboy before I moved to Apple in 2017. I have owned three Samsung devices - the Captivate (AT&T model of the first Galaxy S), Galaxy S3, and Note 5. The last two were enough to push me away for good. 

I think this card will be a huge success for Apple if they can get it in enough people’s wallets. I am just not sure the lending criteria can be lax enough to make an impact. The lack of late fees doesn’t exactly push people to pay their bills. 

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I understand re Samsung; my son is a millennial and my daughter a gen x’er and they both prefer Android (Samsung in particular, a brand I don’t prefer).  Personally, I have too much invested in the Apple ecosystem to switch.  It’s like camera systems (Nikon vs Canon).  It’s just too expensive to switch unless you have a lot of disposable income (which I don’t).  I personally don’t think Apple is “all that” like it used to be.  They aren’t as innovative as they once were, and the quality control is slipping—but, this isn’t what the thread is about.  If I don’t want to carry a credit card, I can pay using Chase Pay or Apple Pay—and that’s IF the merchant is set up for it.  I think Apple cc can go either way, not something I would be happy nterested in