Apple Card will let users grow Daily Cash rewards while saving for the future | Hacker News Reader

Apple Card will let users grow Daily Cash rewards while saving for the future

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26 pointstodsacerdoti15 comments

In retrospect, GE's move into finance with GE Capital, while contributing heavily to the bottom line, ruined GE.

I get that Apple has a lot of money that needs managing, and I'll probably sign up for this myself, but I do fear it's a harbinger of wrong focus and disaster decades from now.

I am not sure it is a correct comparison. Wallets are here to stay so if you are anyways investing in wallets and payments, how much more work is banking? Especially if it is being done by someone else (Goldman Sachs)and if Apple is looking at only technical aspects of the platform.

Edit: sometimes you can get only so much (very little) insight into a business unless you run it, at least a small version of it. I have no opinion on them running a savings bank but it will be really interesting if they ever brought something challenging visa and Mastercard. Not sure if that will ever happen it will be interesting to speculate what if because that market adds on quite a bit to so many small businesses operational cost. You buy from Costco, sell at store, basically finance has added 6% cost there (recoverable with rewards but not for everyone) and if someone can reduce it to 1%, the market dynamic will probably change.

Regarding your edit: Apple has already shown some power here in negotiation between the big card networks. Apple Card has been on MasterCard since it began, but Apple Cash has "quietly" switched networks presumably as Apple has negotiated lower rates. Apple Cash being a "debit card" is even more affected by the network overheads than credit cards. (Cash was on Discover's Debit network for a bunch of years but is currently on Visa's Debit network. I don't think it has yet been on MasterCard's, despite the Apple Card being home on MasterCard.)

I don't know if Apple alone can fix some of our card transaction overhead, but it is interesting to note that they don't appear to be a passive player either.

>Wallets are here to stay

Why so? UPI obsoleted all the private wallet apps in India. Won't FedNow do the same for the US?

Some fun history: GE Capital sold its internet banking arm to Goldman Sachs, which became GS Bank as the start of Goldman's move into retail banking (later rebranded as Marcus after expanding beyond HYSAs and CDs), so there's a chance that some of the infrastructure from GE Capital will help run Apple's new savings product.

And they're not just moving into finance, either.

"As I wrote in August, Apple is exploring bringing ads to TV+, Apple Books and its other storefronts. But up first, next year, is advertising coming to Apple Maps", is what Mark Gurman said just yesterday.

https://twitter.com/markgurman/status/1580259089611124736

Of all the banks they had to choose GS...

Most other banks have their own card program. They found a strong financial services partner who wanted to make an attempt at expanding into consumer lending.

This would be interesting if you could earn interest on "Apple Cash", i.e., money you've got stored on your phone from receiving payments. But it just seems to be some kind of promotional scheme linked to their traditional high-interest credit card product.

The press release says that you will be able to transfer any Apple Cash money (not just Apple Card's "Daily Cash") to the Savings Account and earn interest on it. (And vice versa, transfer savings back out to Apple Cash.)

It does sound as written in this press release like at first the savings accounts will only be able to be setup by existing Apple Card users, but that's likely because that means you've already gone through the credit check/induction process/enrollment into the Apple side of Goldman Sachs' banking products. It's possible it won't be an Apple Card exclusive account option in the long run, though I wouldn't be surprised given the nature of the banking industry if applying for one of these Savings Accounts without Apple Card may involve deeper credit checks and a lot more forms to fill out.

The thing that would be groundbreaking about this is if Apple provided a way for unbanked/underbanked people to access decent savings rates without having to satisfy an onerous credit check (why should they need to prove creditworthiness to use a savings account? There's no credit risk here at all.)

That would be a great goal. I don't expect it in "version 1" of a product though. Apple is one of the few companies I'd even expect to be considering that for a "version 2" feature. They seem to know that Apple Cash is important to the unbanked/underbanked (in the US at least) and have been making slow steps to improving that. That's not a guarantee that they will address that need, but it is interesting to note that I would be surprised if that idea wasn't already on their radar.

It is pretty unfortunate that their current strategy seems to involve partnering with an extremely traditional financial services company, one that seems to focus mainly on upscale banking customers (who are already well-served by the traditional finance industry.) The actual technical innovation in this product seems to be relatively close to nil, though maybe Apple will learn enough from this that they’ll either (1) ditch GS and find other partners (including a subsidiary of their own, they have the cash) or (2) pressure GS into offering services that also benefit customers outside of the upscale-banking sweet spot.

I'm about to sound like an Apple Card ad, but it's a very interesting product/project. I believe what we are seeing is exactly your "expectation #2" but that Apple is ahead of you on it.

Everything about the Apple Card "project" already seems like it is trying to bridge Goldman Sachs' high end banking reputation/support (in the US at least) with relatively more low-end customers than Goldman Sachs has previously engaged with.

It's not entirely obvious if this is Apple trying to leverage their platform/install base (in the US) as a force multiplayer to get better banking platform-as-a-service products than would otherwise be on the market or Goldman Sachs showing interest in better serving a low-end gap in their customer portfolio. It's most likely some combination of both, and you can find evidence for both.

On the Apple side: This savings account just announced, at face value from the PR announcement, is a better value savings account than I've seen as a consumer product from any major US bank, though I'm not a heavy comparison shopper. No fees, no balance minimums, and high interest/high yield? In my experience, that's a Pick-2 triangle in the current US market among the major banks.

On the Goldman Sachs side: Since the Apple Card, GS has purchased more consumer card products and expanded some of their subsidiaries in consumer banking, a lot of that under the brand name Marcus. I'm aware of this because I've now got two cards banked with GS because Capital One sold a card brand, I and relatives have had a long consumer relationship with to Marcus.

Apple definitely seems to have (successfully) bridged GS to more customers outside of upscale-banking sweet spots if Marcus is enough evidence. Apple also seems to be bridging the gap in low-end access to upscale banking products.

(The Apple Card may be a "usual high-interest credit card", but my brief survey of comparable cards it still has a higher rewards output to lower interest rate ratio than most cards I've seen, even discounting that the Apple Card is quite technically innovative. I note that I've got a great credit score and "firmly" middle class income, and Apple Card is still one of the best offers I've seen, though again I'm not the strongest comparison shopper I know. I've anecdotally heard it has a much lower bar-to-entry credit score and lower income requirement than most comparable cards, but that's obviously hearsay and I don't know if such information is public or transparent in any way. And of course "must own an iOS device" is still a "huge" barrier to entry for some of the truly underbanked.)

> The actual technical innovation in this product

I'm not sure we can discount that about this Savings Account yet that it isn't technically innovative. High yield savings accounts are notorious for slow transfers and transfer restrictions (in both directions, which is often why you should never direct deposit to a savings account). This press release sounds like this new savings account will hardly have any transfer barriers/boundaries/fees, which is impressive, but also I would not be unsurprised if Apple was using new tech innovations to underpin it, at least at the banking platform level. It may not be exciting user-facing technical innovation, but it may still be technical innovation. Of course, we don't know yet for sure and we'll have to find out and I'm merely speculation, but I wouldn't be surprised.

Do they really do a credit check to open a hysa? I feel like no one checked mine above the normal KYC stuff.

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