Apple Missed Its Chance to Fix Credit Cards | Hacker News Reader

Apple Missed Its Chance to Fix Credit Cards

onezero.medium.com

23 pointsallenleee21 comments

This reads like fiction. Apple is not becoming a financial company, they are running the card in conjunction with Goldman Sachs; something scarcely mentioned in an article pretending to be a deep-dive. It is not in the interest of GS to shake up the credit card industry, and therefore not in Apple’s interest either.

Isnt' that GS entry in the consumer side of banking though? Apple and GS are very much new player in the credit card world, so any kind of disruption would be interesting.

The reason it does not happen is probably that Apple is not in the business of creating a new market for GS. And on the other hand GS does not have the culture to lead such a disruption.

My bet is that both are using each other as stepping stone. GS will likely enter the consumer banking at some point thanks to what amount to Apple R&D investment. Apple on the other hand will use the experience and roll their own limited set of service in their own time too. Apple probably aim at competing with the like of Paypal and Square.

If anything, all Apple have done in effect is build a nice shiny internet banking UI on top of a normal credit card.

Just like the iTunes-phone collaboration with Motorola in 2005.

https://www.apple.com/newsroom/2005/09/07Apple-Motorola-Cing...

The Apple Card the way Goldman Sachs is doing it is something of a “shake up” of a field where nothing usually changes.

A hundred small choices were made differently adding up to a remarkably different feeling sign up and usage experience.

As far as the article’s expectations of Apple, they’re unreasonable to begin with. Apple isn’t even the “everyone” consumer electronics company with many products completely out of reach of people with average incomes.

Why would anyone expect someone like Apple to upend the credit system? The Apple Card is a slightly better than usual store credit card, as most grounded analysts would have predicted.

I fault the author of the article for taking marketing copy so seriously.

As far as the “broken” credit system, the author of the article manages to miss the point entirely:

> Credit cards are a regressive sales tax on society, fueled by financial illiteracy. Apple had the opportunity to wipe this practice out, offering the same perks—2% cash back, a fancy metal card—to the many millions of financially impoverished people in the United States.

It doesn’t make sense to ask for “cash back for everyone!” The whole idea of cash back is flawed in the first place. It literally comes out of the merchant’s pocket in the form of transaction fees.

Fixing the credit system in the United States would mean capping card transaction fees at a more reasonable rate. The whole idea of a rewards card would go away entirely.

As far as the credit system being inequitable, well, of course it is. Nobody has a solution to that, until we’ve reached a point where literally everyone is able to pay back their debts.

In my eyes there’s nothing wrong with credit scoring itself, the inequities start when people use it for things like hiring decisions (I’m shocked that’s not banned).

The only thing Apple is selling is their brand with the iCard. Hilariously they say it's not from a bank, but it's not only issued by a bank, but runs through a traditional credit card provider.

Breaking the stranglehold of Visa/MasterCard would be innovative. I personally think they should put their economic weight behind something like stellar so the 'unbankable' of the world has a chance to leave poverty.

> not only issued by a bank, but runs through a traditional credit card provider

Goldman Sachs is not a standard consumer bank, and this is their first credit card.

https://www.cnbc.com/video/2019/05/28/apple-card-first-credi...

They’ve made some other unusual choices too:

https://www.marketwatch.com/story/apple-and-goldman-sachs-ar...

> "We use ML and Apple Maps to accurately tag your purchases with real store names and categories"

Monzo does this for transactions in the UK (and has done since they launched a few years ago, IIRC) - it's not novel. I think other banks are starting to do this too.

Here in Australia, Commonwealth Bank has been doing it for a few years as well.

As does Revolut.

I think it’s just a market where Europe is ahead of the US.

My 5 euro banking app from a 3rd party does this and pretty accurate too.

I think Capital One does this in the United States, and the whole Machine Learning and Maps magic that’s associated with it is entirely unnecessary.

The credit card companies already have the address of the merchant. They just stick that address on the map.

Regarding CC rewards: how on earth do these 4-5% cashbacks work for US CC holders in Europe? Here, the CC fees are capped at 0.3%, so who is paying the difference if neither the merchant nor the customer pays?

Many of the cards you see offering 4-5% cashback on certain categories either have 1) high annual fees, or 2) a foreign transaction fee (the the US credit card holder gets charged a fee whenever they use the card abroad, such as in Europe).

Usually the cashback is not earned on foreign currency transactions. If a US cardholder buys something in Euros, it will not receive a cashback reward. Most cashback cards work this way, except for certain annual fee cards as an earlier poster mentioned.

US credit card fees aren’t capped at all from my understanding. Merchants pay something like 2.3% IIRC.

TLDR: Apple card is more of the same, and they didn't fix the author's pet peeve (US credit card/score system is broken and discriminates people).

Weakest article ever. One of his main arguments is that a Taco Bell transaction got miscategorised, lol

There was a good post on r/personalfinance recently about the Apple Card’s mediocrity.

https://reddit.com/r/personalfinance/comments/dwmbzn/ive_own...

The post incorrectly claims you must pay by mail or phone. It also doesn't mention the security aspect of changing card numbers.

Whilst 1-3% cashback is may not be unusual in the US, ~0.2% is typical in the UK (maybe ~1% with Amex). Some countries have hardly even heard of cashback cards, I think. Looking e.g. here:

https://thepointsguy.com/guide/best-cash-back-cards/

suggests that the US market is also not as generous as commentors make out. Most high-cashback cards are quite specialised, often even changing month-to-month. There is only really one exception at 2% on all purchases.

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