Apple pulls plug on Goldman credit-card partnership | Hacker News Reader

Apple pulls plug on Goldman credit-card partnership

wsj.com

266 pointsvoisin271 comments

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-ou...

The earlier story from June suggested Amex might take it over.

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.

> 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/886982/0000886982230... p168, states the net charge off ratio on consumer credit cards to be 2.8%.

I mean you listed plenty of reasons the relationship is bad. But those are all pretty good reasons for GS to want to bail! Like "Apple is a PITA demanding all bills come due on a specific day for everyone" does not lead to "Apple wants to terminate the relationship".

As anyone who has dealt with vendor integrations would tell you, when one side has a list of demands about how something should work, you know it's going to be a headache. Though I am still legit confused as to how GS ended up being the partner (beyond the cynical "every other company laughed Apple out of the room", which is not a great sign for Apple either!)

I have no inside info, but like you I know that GS is pulling out of consumer stuff in general. Let's just say that in a relationship where GS was constantly, constantly, constantly leaking complaints to the press, it's not a huge logical jump to think that GS would want to end such a relationship.

This is all just gossip of course. None of this matters, and I have no horse in the race. It's just fun to think about.

> I mean you listed plenty of reasons the relationship is bad.

Perhaps we misunderstand each other. This is what you said:

> 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.

I believe that I demonstrated that this conspiracy theory – which is entirely unsubstantiated, and which seems to have been largely refuted given that the charge off data is public – cannot possibly be the reason.

Do you still believe that Apple is somehow trying to conceal charge off rates, having read my post?

> it's not a huge logical jump to think that GS would want to end such a relationship.

This is a very reasonable point, but it is not the one you made. It's totally fine to not be au fait with the minutiae of consumer credit reporting at Goldman Sachs, but it would help me to calibrate what your contention is if you could address specific points instead of abstracting to generalisations when it appears to me that you are entirely misinformed.

Do you declare any interest in the situation or potential conflict of concerns?

Why do you ask?

Since the post was way too long to be without motives, presumably.

irritation is a motivation without financial incentive.

I suspect you're right, and I find it to be so sad that anyone could read a fairly well-structured rebuttal to a throwaway conspiracy theory to be evidence of someone having a vested interest.

You're making a value statement about two different positions. Without having adopted such a value statement, I poked at an outsized response. You would need to say why it's a conspiracy theory, any why it's well-structured.

I’m all about equality when it comes to specious conspiracy theories.

That would be cool. Amex support way better than GS that’s for sure.

Would suck for retailers though. Amex fees among the highest when compared to other networks and issuing banks.

On the consumer side, I tend to see Amex as not widely accepted. Especially drops when traveling.

> On the consumer side, I tend to see Amex as not widely accepted. Especially drops when traveling.

As a B2B SaaS owner, I don't accept Amex, because they make me jump through extra hoops. I process all cards through Braintree, but Amex requires an extra agreement directly with them, and they make the process of signing those agreements really difficult and obnoxious. I have better things to do with my time.

I did a quick search, here's a partial list of what was required:

· Please provide a scanned copy of Passports for authorized signers and Beneficial Owners.

· Please provide a scanned copy of Certificate of incorporation

· Please Provide a Completed Multi Currency form, Attached

· Please provide a completed and Signed Side Letter, Attached

· Please provide a completed and Signed W8 BEN form, Attached

(BTW, I am not based in the US, so "W8 BEN" reads like Klingon to me).

Lots of replies, and most are misguided, so I'll add:

I am a B2B SaaS business based outside the US. Tax withholding is not applicable between my customers and me, or at least it is not my responsibility. VAT is solved by reverse charge.

I do have payment processing set up (with Braintree). The above AMEX requirements were on top of that — a completely separate procedure, just because AMEX feels different.

As to the W8 BEN discussion, be careful with your biases: it might seem "obvious" to you that everyone needs to comply with whatever IRS requires of US businesses, if you live in the US. But I have customers in 44 countries. If you are American, before you state that something is obviously required, take a look at this (from recent E-mail):

"Self-Certified Filled Form 10F will be required"

"Permanent Account Number or Aadhaar Number of the assessee if allotted"

"Period for which the residential status as mentioned in the certificate referred to in sub-section (4) of section 90 or sub-section (4) of section 90A is applicable"

Still looks obvious? Those are from India, and I'm pretty sure these requirements seem totally obvious to my Indian customers.

Piece of advice - read up on that W8-BEN.

W-8 BEN doesn't apply to him because it's for foreign individuals who receive non-business income. He needs a W-8 BEN-E most likely.

Imagine being outside the US and thinking "prove you're an incorporated business, prove the major players in your company exist, and fill out this tax form for foreigners"

...is "extra hoops" and "really difficult and obnoxious"

> (BTW, I am not based in the US, so "W8 BEN" reads like Klingon to me).

If only there were technology to look up what 'W8 BEN' means in seconds

If every other payment provider accepts the vendor's terms and that the vendor already has KYC details on file with its US-authorised payment gateway, AMEX requiring signed scanned copies of its own payment terms and multiple forms of identity to be individually emailed to them for each and every transaction is the definition of 'extra hoops', and it seems quite reasonable to consider it difficult and obnoxious.

For a lot of transaction sizes it isn't really worth the extra effort, particularly as filling in forms like the W8 BEN E is the kind of work people tend to pay their accountant - quite possibly more than the value of the SaaS subscription - to do. (As someone who happily prepares his own tax returns once a year, the W8 BEN E is not a particularly straightforward form to fill in for comparatively little benefit)

W-8BEN form is the most obnoxious form I've ever seen. It's written in incredibly opaque and obtuse language and covers far too many scenarios.

And the most incredibly annoying thing about it is that for most UK companies (dont' forget if you are a limited company you need the W-8BEN-E variant!) you probably only have to fill in about 5 short fields. So it only really needs to be half a page. However working out which fields is virtually impossible and I'm still not entirely sure I fill it out correctly.

> Imagine being outside the US and thinking "prove you're an incorporated business, prove the major players in your company exist, and fill out this tax form for foreigners"

> ...is "extra hoops" and "really difficult and obnoxious"

Compare with how willing US citizens or businesses are to comply with similarly basic things when another country asks for them.

Selling on Amazon in dozens of countries requires only one from, that from the US. No other country.

Even if I don't sell in the US. Even if I never go to the US. Even if I have no company in the US.

Imagine everyone in the US selling on Amazon needing to sign a German form, and a French form, and a UK form, and a Spanish form etc. with no intention to sell in these countries.

Just saying, the UK has a form of business called a "Sole Trader" where you don't even need to notify the government about until it's tax time. Something like a "Certificate of incorporation" doesn't even exist for that.

So yeah, sometimes it fucks things up.

In the UK you can register whatever limited liability company you like on Companies House without any formal process except handling tax accounts (or sometimes VAT). No proof required at all for this, you’ll only need it to set up a company bank account (and that will just be notarised ID).

It just so happens that the UK is therefore an incredibly easy place to dodge tax if you are so inclined.

From a french perspective, that seems like tuesday.

Apple Card was already charging high merchant fees. https://www.imore.com/retailers-are-paying-premium-you-use-y...

Now it’s going to get even higher with Amex network fees

I got an Amex card and I think it kinda sucks. Many businesses in Thailand don't accept Amex, I think due to the high fees. At some point I want to change my card (once I can get a credit card from a bank in Thailand, cause my Amex card is from The Netherlands).

Would be much better if Apple would get with MasterCard. Based on my experience, no issues anywhere.

Amex’s business proposition to sellers is “we charge high fees but a lot of rich people have Amex so you (the seller) should suck it up and accept us anyway”

Sure that works if you’re selling perfume or handbags, but if you’re a family restaurant then rich people and regular people eat the same quantity of food, your margins are low, why accept it?

Moreover Amex is pretty rare outside of certain markets. If only foreigners use Amex, and your business is not catered to foreigners, then you probably aren’t going to support it or in some cases even know what the hell it is.

Whelp, here in Germany many Starbucks and McDonalds, as well as some restaurants(middle to high end) immediately decline(or block Amex payment at counter), though if I am a bit sneaky and use Apple Pay method they can't see it and sometimes actually work.

The issue with other cards here(Germany) is, everything is fake credit, i.e. my Visa/MasterCard is just "Debit" and immediately books paid amount from my bank and some also comes with hefty monthly fees because they issue a shiny/designer "Debit" card. My bank indeed issues a real MasterCard but the monthly fees are unreasonable added on top of my already expensive checking account fees and it has very crappy app where trying to temporarily (un-)block my card needs calling their support and waiting in line while amex app gives me these features immediately on app.

Amex however gives me real credit(though they book the whole amount on start of next month) and also payback points in exchange for minuscle monthly fees but they have free same card with less sexy design which doesn't signal my ego correctly.

I prefer a debit cards. Makes it easier to track my spending, and no risk of overspending.

Plus, probably lower fees…

> My bank indeed issues a real MasterCard but the monthly fees are unreasonable added on top of my already expensive checking account fees and it has very crappy app where trying to temporarily (un-)block my card needs calling their support and waiting in line while amex app gives me these features immediately on app.

Get yourself an N26 account/card if it bothers you too much. It works as a Mastercard (still the "Debit" kind though), has no account fees and you can do basically everthing from within their app.

What you describe for your particular Amex card isn't a real credit card either. That's a charge card. Germany doesn't do real credit cards much (if at all?)

It's a total difference of point of view.

In Europe, banks don't like you taking out credit cards. Borrowing money is viewed as a weakness and it's best to never do it.

In America it's considered a virtue to have many credit cards and shuffle them so you can be seen to pay it off. Really weird.

> In Europe, banks don't like you taking out credit cards. Borrowing money is viewed as a weakness and it's best to never do it.

Don't know about that, "Europe" is a big place. Credit cards are pretty common in the UK at least, and stuff like balance transfer cards (for shuffling) are too. Maybe not to American extents, but hardly a weakness.

In fact, looks like more people in Iceland, Norway and Switzerland own credit cards than the US: https://www.statista.com/statistics/675371/ownership-of-cred...

Well the UK is a similar state to the US.

I don't believe this about Switzerland though. They are a very typical people that abhors spending money you don't have. But I think they may be counting debit cards there.

Credit cards have a crucial benefit over debit cards: they add a layer of indirection to my bank account.

Steal (or mischarge) my credit card, run up 10k in charges, no problem. No money ever comes out of my bank account and I dispute the charges/report the card stolen.

Steal my debit card, run up 10k in charges...there's 10k gone out of my account until the bank resolves the situation.

Here they won't let you dispute charges. There's no purchase insurance included either. Or those cashback awards like you get in the US.

It does, he could get one from Hanseatic Bank for free, DKB had a proper credit card for years (now with s fee). They are mostly fee-ridden, since germans don’t like them very much (cultural thing?) and they are offered as an extra.

Beside the culture (losing everything twice in the last 100 years),

I think money transfer plays a big role. Germany never had a culture of cheques and switched from money to money transfers early on (before WW1), so most stuff in Germany either I pay by money transfer ("Ueberweisung") or a company takes the money from my account ("Bankeinzug") - like mortages, cars, rent, electricity, travelling etc. In the US credit cards partially replaced cheques (and added credit, duh!), which was never something in Germany. The only use of cheques in Germany were traveller cheques when travelling - and then only to get money at the hotel.

Even for the catalog business people payed by invoice and money transfer (and the catalog companies gave you credit).

What is left, like groceries, is often paid in cash.

One thing that never made sense to me is that im sure 99% of all the rich people who have amex also got at least another card. If you dont take amex wont those people just use another card.

Two things:

1) the backup is likely a high end rewards / corporate card whose fees are as high or higher than Amex for most categories of spend; and

2) it’s kind of weak for the last interaction with a business be them saying they won’t take your preferred form of payment because they imagine it boosts their margin by .3%.

Sure, they’ll do that once. It might annoy them so they don’t come back. This might bother some business owners and not others.

Yeah I have never met someone using an amex card that didn't have a backup visa or mastercard.

> but if you’re a family restaurant then rich people and regular people eat the same quantity of food

rich people can afford adding two half strips of bacon for almost half again the price of the burger. they can also afford to leave a third of it on the table (daaaang that off-label semaglutide does magic) and then do it all over again tomorrow.

doesn’t mean they will. but they could. they have the means to do so.

that is what amex is advertising, even if it isn’t quite what they provide.

Same in Europe. I have an Amex card from work. Hotels and most restaurants accept it, most taxis and shops don't. They absolutely hate that card and even if they accept it you practically have to beg them to take it (and even then they will pretend "the machine is broken"). Even in big countries. Try to get a taxi in the queue at Charles de Gaulle airport in Paris. They will ask you to stand on the side and beg each taxi driver until they finally get one for you.

Also the damn thing never works in machines, like for public transport tickets :( Which is often a far better option than taxis.

I have to use that card for business expenses and I hate it so much.

As an American, I only use my Amex at businesses I dislike, but am forced to patronize for whatever reason. And groceries. It's pretty good for groceries.

Doesn’t work in Costco. Visa works everywhere.

Costco only accepts whatever credit card the Costco credit card currently is. Right now that's Visa, but it used to be American Express before 2016, ironically.

Supposedly this exclusively allows them to negotiate down the fee really low.

Costco UK accepts all three card networks (Amex/Mastercard/Visa). I wonder how their UK division can do this if Costco prefers to do exclusivity deals that allow them to lock in a low fee?

Europe has lower fees by legislative fiat. UK still has these (mostly) due to the majority of these caps existing pre-Brexit.

It's Mastercard in Japan

https://www.costco.co.jp/GlobalCard

mastercard in canada too

Surely the grand total of Costco’s US credit-card fees can’t amount to more than a percentage-of-a-percentage of all credit-card spending in the country?

...otherwise WalMart and other major retailers (Amazon?) would have partnered with a single credit-card network to benefit too

Walmart and Kroger have had their own disputes with Visa (for one example) and (at least Kroger) started blocking some of their cards at select chains in order to negotiate a better deal. Costco has super tight margins. The the point that when their execs are talking about the price of goods they don't say, "[Item] is $70." No, they say, "[Item] is 69.99." Their culture is about every last penny of the margin. Their money comes from memberships.

> Amex as not widely accepted. Especially drops when traveling.

Only nutters use Amex whilst travelling (or at least non-US nutters)

The double-conversion gotcha is a real killer.

Everything gets converted back via USD.

So for example, if you have a EUR Amex card and you go to the UK, the AMEX flow is: GBP -> USD -> EUR.

And they take, IIRC 3% from you on each leg of that double-conversion.

Is that an EU-issued specific phenomenon? Even when I travel to the EU and use Amex (or Apple Card or a number of others) this doesn’t happen. Think it falls under the “no foreign transaction fees” feature set.

The only remaining “gotcha” that I run in to is sometimes a shop will try and get you to pay for something at the point of sale in USD instead of the local currency since they can (within reason but exorbitant) set the exchange rate. Tip- pay in local currency.

> Is that an EU-issued specific phenomenon?

Not as far as I'm aware. It certainly happens with GBP-issued and having briefly looked at some of the agreements, it happens with various Asian issued cards too.

To clarify:

      - If the transaction is in your "home" currency, you get charged in that.
      - If the transaction is in USD, you get charged in that.
      - Everything else is subject to double-conversion

Example wording below from the GBP card (the last phrase of the last paragraph is the important one). I see they no longer charge double-fees, but you will still loose out on the double currency conversion because there will be a double-spread on there:

     If we receive a transaction or refund for processing in a foreign currency, we'll convert it into Pounds Sterling on the date it's processed (which may be different to the date of the transaction or refund).

     This means that the exchange rate used may differ from the rate that applied on the date of your transaction or refund. Exchange rate fluctuations can be significant.

     If the transaction or refund is in U.S. Dollars, we'll convert it directly into Pounds Sterling. In all other cases, we'll convert it into U.S. Dollars first and then into Pounds Sterling but we'll only charge one non-sterling transaction fee.

I don’t think this is universally true. I had a CHF Amex for years. Used it by in EUR and USD online and in person.

> CHF Amex

The Swiss Amex is a bit special anyway because its operated by Swisscard which is a JV between Credit Suisse and AMEX.

Back when POS terminals read magnetic stripes, most in Europe didn't even support the Amex stripe in hardware, because it was different :)

Even now with contactless and chips (Amex has discovered chips right?) the only places I see Amex logos are 4+ star hotels and very posh restaurants. So it will be kinda useless outside the US.

Majority of large retailers in the UK take AMEX. Probably over 75% of my consumer spending goes through my AMEX card - Petrol, Food etc, never had an issue.

Can't speak for the rest of Europe.

It matters a lot less than it used to. With the exception of working on the Olympics I’ve been able to use an Amex for most travel expenses since 2000. What was more of a pain was the lack of EMV chips in US credit cards for a long time.

What did you do for the Olympics?

Was a “webmaster” for the Atlanta and Nagano sites and managed an application development team for Sydney.

> On the consumer side, I tend to see Amex as not widely accepted. Especially drops when traveling.

I’ve found the main difference being cash only venues versus card+cash accepted.

I just got back from Japan and traveled to Tokyo, Kyoto, Osaka, Hiroshima, Kawaguchiko, Miyajima, and it was somewhat rare to find a business that accepted cards but didn’t accept Amex, much to my surprise!

Yeah, outside the US, plenty of shops outright refuse Amex.

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.

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.

People are worried over AGI, but I claim it's already here depending on which human population you compare against.

Which corporation: most of the things people worry about with AI are indistinguishable from a group of humans who’ve been told that they’ll be rewarded for making a number go up each quarter. I’ve had some impressively fluent-but-nonsensical conversations with people who were under strict orders not to say they couldn’t do the obvious right thing.

If you compare artificial intelligence with natural stupidity (or rather natural I-don't-give-a-shit), this is bound to happen. Both give wrong answers, but the answers made up by LLMs at least sound more convincing...

Biggest issue is an LLM will often lead you to a dead end or unsatisfying answer and will quit the call abruptly while sometimes with humans you can escalate to a manager.

The LLMs are also much more polite and well-spoken.

You can talk to a person and try to develop an understanding. You can’t fix a broken computer you don’t own.

What's the old saying?

You don't have to run faster than a bear, just faster than the person next to you.

isn't it the case with every company out there? I had the same style reps with every financial institution including AMEX.

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.

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.

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/, if they brand it so prominently as their own, they should also own the problems.

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.

Why did that surprise you? Goldman Sachs makes it money with anything but consumer banking after all.

Genuine question.

I was an interbank customer of Goldman Sachs (literally trading billions a year with them) and their "customer service" sucked - we were to be greatful that the mighty Goldmans recognised and dealt with us.

I can not imagine that a cosumer or mass market product would be any better - certainly not going from their niche presence in the consumer market to apple scale number of customers.

This is what I'm asking... It's like going to the wholesaler and wondering why they don't have a nice pretty brick-and-mortar to buy from. GS doing consumer credit just seems like a large impedance mismatch in various levels.

Sorry... just musing on this topic because this is giving me a laugh.

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.

What is the underlying reason these consumer offerings have been such a failure? Something like a savings account should be the closest thing to free money there is - stick the cash into t bills, collect a margin on top and pass the rest back to the customer.

Do the marketing/cs costs really outweigh the margin? Or is it some issue with how the assets backing the account are invested?

Goldman is known for servicing ultra-wealthy and business clients. Consumer finance seems like a completely different beast to me.

Tighter margins. Lots of low-paid call center staff and low-paid managers to crack the whip. Folks at Goldman would rather be on the golf course doing shady deals with Trump and Musk.

I guess I still don't understand... how much customer service do you need to run a savings account? How do you even screw that up?

Operating a savings account like this one should be close to just picking money off the free money tree. It's wild to think that it costs them more to operate this than the margin they take off it.

You seem to think savings account do not get withdrawn against. If you take the customers cash to put into a T-bill but the customer withdrawals money before the T-bill matures, where do you get their cash from to honor the request?

Not everyone uses offerings in the manner the offerer expects. As software types, this is familiar territory. If you design a thing with only the happy path in mind while never allowing for that path not being followed, you’re in for a very rough time.

I do recall that the way at least the Apple Card deal was structured ended up extremely unfavorable to GS. It seems that part of the reason the Apple Card deal went so poorly for GS is because the initial negotiation and terms of the agreement heavily favored Apple. So perhaps it was just lack of knowledge of the industry in a big way that tanked this deal.

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.

They've been signaling they were pulling out of consumer for the last few quarters.

Are there any alternatives to Marcus? It has felt like too good of a deal to last.

Cash just sitting untouched in my Vanguard account's default money market is earning more than my Marcus account. I had to transfer everything out of Marcus because there was no point in using it.

As of right now, Marcus is yielding 4.4% APY while Vanguard Federal Money Market Fund (VMFXX) is paying 5.3%

That isn’t FDIC insured like Marcus (or other HYSA) are.

The default settlement account, Vanguard Federal Money Market Fund, has incredibly low credit risk because its assets are short-term US Federal gov debt and Federal Reserve repurchase agreements. [1] Neither of those entities have substantial default risk. Further, the global financial chaos of significant defaults from either of those entities would likely render FDIC insurance ineffective because too many banks would fail simultaneously due to their assets in those classes.

[1] https://investor.vanguard.com/investment-products/mutual-fun...

Or Vanguard could collapse from the inside because some C-level officer was dipping into customer funds to cover some bad investment, and everyone takes a haircut on the holdings. On top of the drop in market value because most vanguard customers invest in vanguard funds, which suddenly become a toxic asset. Your "safe" money market asset is considered equal and paid out pro-rata, sharing the loss of those mutual funds.

Meanwhile the FDIC insured savings accounts at the bank next door are just fine in the midst of this total and complete market meltdown, and those account holders decide it's time to diversify and pick up some cheap stocks.

That's just one scenario. “Low risk” is not the same as no risk, and the difference isn't important until it suddenly is.

https://investor.vanguard.com/investor-resources-education/a...

I’m very certain that even in the crazy case you have outlined, SIPC insurance would cover up to a half million. Some brokers provide additional insurance beyond the regulatory requirements.

I think everyone recently learned about FDIC because of SVB etc., but I think it’s important that people are also aware of SIPC, and especially to consider that there is no crypto currency exchange that offers any such insurance of any kind, https://www.forbes.com/advisor/investing/cryptocurrency/cryp...

Your example is a poor one, and does not represent the actual risk of money market funds.

Customer assets at brokerage are required to be held by a 3rd party custodian. Customer assets are not held at the brokerage itself and cannot be touched. An executive cannot merely "dip into customer funds" to cover a bad investment. Brokerage firms are regularly audited for this exact scenario. If your assets were to go missing, the SIPC would liquidate assets of the firm itself as necessary and cover the rest up to $500,000.

The actual risk is of a MMF "breaking the buck" and being unable to return your money. In 1994, a fund went under and was only able to return 94 cents on $1. In 2008 a fund went under because of its toxic Lehman Brothers holdings. This is why you should understand what is inside of that fund before investing in it.

For example, VUSXX is "is required to invest at least 99.5% of its total assets in cash, U.S. government securities, and/or repurchase agreements that are collateralized solely by U.S. government securities or cash." These are not unregulated funds either; the SEC has been significantly increasing the scrutiny and regulation of MMFs both recently and historically.

The question you really should be asking is whether you think US treasury bills are sufficiently safe, not whether Vanguard is doing something both obvious and illegal.

That is impossible because each Vanguard mutual fund is a distinct legal entity. Assets cannot be moved between funds. See Vanguard safety for more details: https://www.bogleheads.org/wiki/Vanguard_safety

Vanguard has about 30 SEC registrants (formally, Delaware Statutory Trusts) for all its US mutual funds. But it has a lot more than 30 funds. For example, VMFXX is managed by Vanguard Money Market Reserves, which also holds VUSXX and the former VMMXX.

True, but Vanguard has "too big to fail" insurance.

Pretty sure that "insurance" only covers their money, not yours.

Vanguard is an investor-owned mutual company, so that's one and the same, no?

UFB Direct has the highest FDIC insured savings account I've seen, 5.25% (and its been there for a while)

https://www.ufbdirect.com/

I'm currently seeing 5.05% APY from a CITbank savings account.

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.

I'll keep an eye on it, thanks.

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.

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-...

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.

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.

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.

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-problem...

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).

Is that still the case if the bank is a subsidiary?

Yes, the Bank Holding Company Act of 1956 regulates "any company which has control over any bank".

Hat tip. This part is so important. It prevents a non-bank from taking over a bank with the implicit goal of lending money to themselves. This would be a real danger.

This is the perfect opportunity for them to acquire Apple Bank https://www.applebank.com/

I imagine they'll replace the physical cards as the existing ones have Goldman's name on the back. The transition could otherwise be nearly invisible, the Goldman name and actual card numbers don't show up often in normal usage.

New card better have the same weight and feel! It’s what made me want to sign up if I am being perfectly honest. I mostly tap to pay but enjoy getting the card out every once in awhile.

Ugh, please no! I think it’d be cooler if it was lighter and slimmer than other cards, not 4x as heavy.

Minor nit:

> Costco Card: Amex -> Visa

Amex -> Citi.

Amex was both the issuer and the network (they're vertically integrated, so to speak). The shift saw Citi become the issuer on the Visa network.

my bad! updated, I was thinking Citi but Visa came out after typing Amex right before. thanks!

>Unless Apple discontinues the card completely, they will choose a new bank

That's the problem. All other banks turned Apple away because Apple was demanding some significant concessions. Goldman agreed to them because at the same time they were trying to break into the consumer business.

Apple will have to cave.

That was before Apple had however many card customers they now have.

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.

Ah yes I remember the black Uber card. IIRC you got $50 annually for subscription services along with some other unheard of perks.

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.

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.

I hate that it works this way, but perhaps an Apple-Amex deal is what is needed for businesses to start accepting Amex.

Edit: typo

What would that change?

Amex acceptance in the US is basically ubiquitous, and how would a new type of Amex change things abroad?

If the Amex partnership includes global (or at least, European) expansion (which seems more plausible than with GS), it may generate extra pressure on vendors to accept it. iPhone market share is quite high in Europe(~35%), and I’d guess mostly comes from high spending sectors (e.g. 56% in Swirzerland, 50% in UK). I would try to attract their business.

It would definitely help Amex, but I'm not convinced that Apple would inflict the significantly worse acceptance on themselves without significant upside.

That upside might be Amex's uncapped EU credit card interchange, but that would very likely not apply to a co-branding scheme with Apple: https://www.headforpoints.com/2018/02/08/american-express-eu...

The Apple card was only available in USA. So market share abroad is not really relevant. Card margins are much lower elsewhere so its not such an attractive product.

There's little incentive to change. Retailers also know their clients who use Amex, are aware how little it is accepted and are likely to have a backup alternative they can just use.

lower fees is what is needed for businesses to start accepting amex.

visa and mastercard are 2-3%, amex is 5-6%. there's no upside for merchants to accept transactions where they have to pay double the processing fees

This is not true. Anyone in the US who has told you this is confused or getting ripped off by a predatory ISO (the companies that offer credit card processing).

Numbers below are only looking at the percentage, not the flat per txn fee or the other fees like assessments, etc... Only apply to the US. Also assuming you do less than 1 million a year in card volume.

First let's look at actual merchant services costs:

Stripe, Braintree/PayPal (online) you pay the same fee for all cards. Around 2.90%

Wells Fargo (in-person) charges the same rate for all cards until you are high volume. Around 2.40%

Chase (in-person) charges the same rate for all cards until you are high volume. Around 2.60%

Bank of America (in-person) charges the same rate for all cards until you are high volume. Around 2.65%

Now let's look at the actual amount the card issuer charges for a restaurant to accept a card (assuming you're working with an ISO that does OptBlue, all the above do). The markup you pay your merchant services provider is added on top of this.

Amex: 1.60% - 2.85%.

Visa: 2.10% - 2.70%.

MasterCard: 1.85% - 2.00%.

This reply is awesome. How do you know all of this?

MasterCard and Visa openly publish this information. I can't easily find a similar reference for AmEx, but this isn't secret.

https://www.mastercard.us/content/dam/public/mastercardcom/n...

https://usa.visa.com/content/dam/VCOM/download/merchants/vis...

I’ve worked in payments for a long time (I did payments at Amazon, Lyft, and Blizzard). Also used to run a company similar to Stripe.

The difference is not that high. In fact, my understanding is “Visa Signature” and “World Mastercard” (which are most of the premium credit cards) normally cost about the same as Amex. At worst it may be about 1% more not double.

You're correct, take a look at my other comment for a breakdown.

Compared to european payment cards with their 0.125% total fees, Amex' 6-7% is a steep ask.

The highest Amex interchange rate is about 3%. https://www.creditdonkey.com/interchange-rates.html

Merchant rates from local payment processors are: 0.125% for Girocard, 1.39% for VISA/MasterCard, 6.2% for AMEX

It's nowhere near 6-7%. See my other comment for more details.

Payment cards that only have a 0.125% fee? Are you talking about a debit card or a payment / credit card?

"payment cards" includes debit cards, credit cards, and other types of cards that can be used for payments, such as the German girocard standard. There's no meaningful difference between these products if your locale has working consumer protection laws.

The payment processors I'd be looking at offer merchants rates of 0.125% for girocard, 1.39% for VISA/MasterCard, and 6.2% for AMEX.

Card fees are capped in EU, and I wonder if amex has any way of going around that. (0.2% debit, 0.3% credit)

https://eur-lex.europa.eu/EN/legal-content/summary/fees-for-...

Yes, they go around that because they are considered a “three-party scheme”

https://politics.stackexchange.com/questions/48519/why-are-a...

High fees are what Apple uses to offer such “great benefits” with their existing card. If they want to expand to Europe, the only cards enabling that would be Amex, or Diners (which is even less accepted I think).

Diners is accepted everywhere Discover is. It's smaller than AmEx, probably, but it's all over Korea, for example.

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.

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.

    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.

The FX spread is fixed at around 25-50bps for Mastercard/Visa due to a settlement long ago. The foreign transaction fee is an additional charge on top of that, usually 3% of the gross transaction volume in USD.

The banks don't control the exchange rate, it's determined by the card network. So yes, when a card advertises 0% foreign transaction fee, it really does mean that they don't take an additional charge on top of the spread (which they don't control or profit from).

It's in fact quite easy to pay less than 100bps for a foreign currency transaction; everybody with a 0% FTF card is doing it right now (especially for high volume corridors like EUR/USD).

> No fees, plus 1% or less FX spread on major currencies. (My preferred credit card promises that.)

You bank can't promise what they don't control; Visa and Mastercard determines FX rates, and they're below 100bps because of an old settlement. So the bank is promising you something they had no role in creating; you're the one here falling for the marketing, not everybody else.

I think as a card provider you still make money on this, from what I remember the card provider can settle directly with the scheme for foreign transactions the next day. There's still a good margin on the mastercard rate, I've definitely observed more than 50bps spread, but that's GBP -> THB etc.. Would a fulltime forex trader cost more though?

You can look up what MasterCard's conversion rate is: https://www.mastercard.us/en-us/personal/get-support/convert...

For a major currency pair, like EUR-USD or JPY-USD, you can see that it's less than a tenth of a cent off the 'real' rate.

> Honestly, it is very hard to pay a total of less than 1% on foreign transactions.

I would argue that you are not looking hard enough if you're paying 1% on FX card transactions.

All you need is a multi-currency card from one of the Fintechs, that will get you down to 0.5% or less without any effort.

Of course if you're the sort of person who likes taking cash out of ATMs on holiday then you'll have to look harder, since there is usually a surcharge on ATM withdrawls. But even then its not impossible.

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.

In France, the fees required to accept Amex are still way higher than MC/VISA. They are still not widely accepted and not a lot of persons know about Amex.

The fees are higher everywhere. Their pitch is "our fees are higher, but we have higher-end customers who spend more", which roughly tracks with reality. But a hot dog stand isn't gonna have whales but an upper-end store might, so it's not surprising to see less support it.

The hot dog stand might actually accept Amex.

High-end businesses accept Amex, because it's worth it. Major chains can probably negotiate good deals. Tiny/seasonal businesses often use middlemen like Zettle that charge high fees and accept almost every payment method imaginable. Those in the middle who use traditional payment terminals and pay list prices may still avoid Amex due to the high fees.

I thought the EU had regulations on credit card fees? As I understand it, the Amex isn't widely supported because Amex's fee-heavy business model wouldn't be allowed to launch.

Visa's highest tier cards (Visa Infinite cards, such as the Chase Sapphire Reserve), already have higher fees than the Amex Platinum. The difference is, Visa won't let merchants ban single cards (you have to accept ALL Visa cards), while banning Amex meaning you are banning mostly high tier cards and losing nothing on the low end.

The EU regulations are on interchange fees that are paid between the issuing and the acquiring banks.

With Amex, Amex themselves are both the issuer and the acquirer, so there is no interchange to regulate.

https://curia.europa.eu/jcms/upload/docs/application/pdf/201...

At least it might solve an issue a friend of mine has. He really wants an AMEX card, due to traveling, but you can only get corporate cards here, AMEX doesn't deal with private individuals and won't issue you a card. I suppose he can just get an Apple card then.

The beauty if going with AMEX, if that's what they'll do, it that it's a one stop shop. No need to go through a bank to issue a credit card, just deal with the credit card company directly. Currently the card is pretty much useless, but it does fit Apples way of doing things, cutting out the middle man.

For American Express it could also help make them relevant as a card company again. If they have plans to expand beyond the US, this might be a good way to do it. Companies will want to be able to accept Apples card, even if that means signing up with AMEX. Then in a few years, AMEX can start pushing their own branded cards which will now be more widely accepted.

Interesting. I had zero issues using my Amex in France and Switzerland this past summer. In fact, there was only one restaurant that I visited that wouldn't take it. I must have been lucky.

How long were you there for? Out of how many stores? Still, that’s a significant enough failure rate to be a detractor.

At least in Switzerland, Amex is still a pain to use.

I have used my AMEX in The Netherlands and Belgium…once.

The foreign transaction fees are steep.

I have to ask which AMEX. I used my Platinum overseas quite a lot (they give all AMEX cards free to US Military) and never had cause for complaint.

I agree, but would this still be the case if using it through Apple Pay vs swiping the physical card?

Apple Pay won't override the merchant's point-of-sale system's configured accepted networks; for example, it won't help you use an Amex at Costco.

(It will help you if the merchant says "we don't take Amex" but their terminal actually does, though. Surprisingly common at small shops.)

Yes. Amex is already on Apple Pay all around the world, and it’s only accepted at stores that accept Amex.

In the US, that situation has dramatically changed in the last 3 years or so.

My experience with Amex the last 5 years is that its just as well accepted in Europe as it is in US.

Not data driven, just been to a lot of countries for extended durations.

The random restauranteur or merchant that doesnt take it is just as rare and random in both environments.

2025 is 15 months away!

The rumor was GS was trying to sell the contract to AMEX. There was no indication that AMEX was biting.

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.

> 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.

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!)

There’s at least 50 different online banks that are paying more than 4.15%. Check out depositaccounts.com. Off the top of my head, Ally, Capital One, Vio Bank, MyBankingDirect, SoFi, and a bunch of others. If you’re getting less than 5% it’s time to open a new account.

I have a HYSA with UFB Direct (5.25% APY) and if you use Wealthfront or Robinhood, their paid offerings have 5%-ish. Apply is like 4.5% or something. I've been meaning to move that out to one of the 5% accounts.

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?

It's pretty easy to find 5% right now, especially with money market sweep accounts that invest in US treasuries.

As of this writing, Ally is still higher than Apple Savings account (4.25% APY vs 4.15% APY)

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.

They will find another bank to back them (hopefully Chase), and most customers won't realize the difference.

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

Thank you!

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.

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.

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.

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.

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!

https://archive.is/ShGa2

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.

This article is paywalled, with no way to bypass. Non-paywalled summary here: https://www.theverge.com/2023/11/28/23980261/apple-is-report...

Can I assume everyone commenting here has a WSJ subscription?

> 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.

>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

It's also available for Firefox:

https://gitlab.com/magnolia1234/bypass-paywalls-firefox-clea...

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.

> 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).

Not me! I didn't read the article. Thanks for the summary.

>with no way to bypass

https://archive.is/ShGa2

Ironically, I just read it on Apple News.

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.

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.

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.

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.

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..

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.

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?

I got it at launch and use it to this day. The pandemic happened like 4 months later which accelerated the trend for everywhere to accept Apple Pay, so now it's basically 2% cash back anywhere no strings attached. I also got the extra discount on my new iPhone in 2021 and 2 years zero interest financing which was worth real money as rates rose. Combined with being tightly integrated into my iPhone it's a no brainer. I still use my Fidelity card for a lot of things though as well, it also is a 2% cash back everywhere card.

The card is pretty useful to me as a first card since it has no foreign transaction fee.

Agree it became my primary card when I recently spent three months in London because of that and the ubiquity of Apple Pay.

We got it for interest-free yearly paybacks (plus cash back) buying a MacBook Air, two watches, and two iPhone 13s. Have put an occasional small purchase on it just to stay active, paid off right away. The titanium card is excellent, though I've only pulled it out once.

Came for the physical card, stayed for the Daily Cash back/applepay on the watch.

You can use all your cards you've setup in ApplePay on the watch.

Indeed. Applepay gives a higher % back for tap payments than sliding their sexy card though. Because of that, it rarely leaves the wallet.

Maybe. I got one, wife got one. we merged accounts as soon as it was available. It's our #1 used card by far.

I've been 100% satisfied with the Apple Card & Savings.

I rarely use it because my Chase Preferred has more offers/benefits.

Mostly these days it's used for Apple payments like iCloud for the extra percent back in cash.

Ah, that is a decent use case. Seems like it would only net you a few bucks more back a year than chase points if you're, say, buying the Apple One Family plan though. I also have both the Apple card and the Chase Reserve and end up using the Chase card exclusively because it has better benefits, and can really probably only recommend the Apple one for people who rarely travel and buy a lot of Apple products. The Chase ones pay for themselves across one weeklong vacation. If you use them as daily drivers (e.g. funnel all of your expenses through them) you can usually buy several plane tickets a year on points alone

Yeah Chase works out the best for sure. Especially if you manage to get a signup bonus. That's what I did for the Preferred earlier this year and it netted me 80k extra points. Used part of it to get "free" roundtrip economy tickets to Japan from California. Not bad. You're right though that the Apple Card just isn't really that worth it unless you're buying hardware every year, which I do not.

If you have some greater than nominal amount of yearly spend on travel (like $500, seriously) I highly recommend upgrading to the reserve right after your year end bonus (this will maximize your points). Better even if you get an upgrade bonus. You get $300 of the $450 back immediately after you spend it on travel and the extra points will be made back in weeks if not months if you spend on it even a little. I had the preferred for like 6 years because it was the cheapest card with no foreign transaction fees and after upgrading to the reserve this year I am kicking myself for having waited this long. The lounges are meh but the better insurance and more points are killer, plus the one time free global entry is a nice benefit as well if you don’t already have it.

I tried to use it a few times and then cancelled it. It got declined a lot and no explanation was ever given.

I've had it since it launched. I make thousands of transactions a month. I've never had a decline.

Now I wanna know how you make thousands of transactions a month. Even 1000 per month would be 30+ transactions per day?

I read that as "thousands in transactions / month" which is easily done.

Thousands? What do you buy if you don't mind sharing?

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

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.

+1 to the whole fraud issue - I had a fraudulent transaction from the apple store, my card but not my account, and they at first refused to believe that the virtual card number could be stolen, which it can as it’s just a credit card number once it’s in a website’s database ripe for stealing. Then they tried to get me to talk to apple to refund it - saying I should give them the order number/details that kind of thing. Which I didn’t have of course! Apple was like, chargeback when I talked to them. Goldman sachs had to be prodded like 4 times before they even started the process. In the end luckily the pending charged never went through so the dispute was closed “in my favor” somewhat.

I've had the Apple card since it was launched and have had one or two fraudulent charges, they were trivially easy to resolve, everything occurred via iMessage for Business.

I don't mean to diminish your negative experience, but it's not universal.

> 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.

The Apple rewards were quite a bit more generous than my previous card. I just looked at the Chase CC landing page and the rewards didn't look any better than my Apple Card. Which Chase card did you move to?

>I don't mean to diminish your negative experience, but it's not universal.

I mean, there were enough complaints about the dispute process (both the outcomes and the slow timelines) that Apple forced a policy change around it: https://9to5mac.com/2022/02/11/apple-card-disputes-transacti...

This isn't just sour grapes that I had a bad experience, it's a genuine reputation they developed. Compared to other companies that have much easier dispute resolution processes.

>Which Chase card did you move to?

Chase Sapphire Preferred, which has a sign on bonus (after minimum spend) worth $750. These companies with established rewards programs let you leverage points in ways that vastly outstrip their raw "cash" value. You can end up booking much more in travel etc... than if you were to just convert it to cash back.

It's not as simple and straightforward as the Apple Card, but it's also not rocket science. I generally just pay for all my expenses with the card and accrue reward points.

> But whipping out your phone sucks compared to just tapping your card against a reader.

And I’d have said whipping out my card sucks compared to using the watch that’s already on my hand. (Of course that works with my other cards as well)

I don't really understand how whipping out your phone is harder than whipping out your card even if you don't have a watch. In my case I gave up carrying the cards at all a few years back and pay for everything on my phone anyway; the convenience of not needing a wallet or any cards at all is high.

The steps to pay with Apple Pay are you have to take out your phone, double click the button on the side, confirm you want to pay, have it scan your face or do a fingerprint scan, then hold the phone waiting for it to confirm "client side" - plus Apple Pay isn't as widely supported as the "tap to pay" method which has a simple logo you can look for without having to discuss it with the cashier.

Whipping out a much smaller, lighter rectangle and simply tapping it on the reader and putting it back in your pocket takes less than a second

I thought that Apple Pay is always accepted at the same places where you can tap to pay. Is there a difference? This mentions it can be used anywhere that the contactless payments symbol is.

https://support.apple.com/en-lamr/guide/iphone/iphbd4cf42b4/...

No authentication and you’re holding out a lighter object. If the NFC terminal is further back on the counter the cashier is more comfortable taking your card and tapping it.

(I love paying via watch but I think it’s good that most cards now do the same.)

I'd considered not wearing my apple watch every few weeks then I remember how cool it is to hop in the car, forget my phone and wallet and still be able to pay for things.

Or being able to pay for stuff at resorts/pools without worrying about losing my card.

Apple Pay is the killer app for the watch for sure.

I absolutely love paying via my watch. Only issues I have had is related to random “card updates” which delay the process a bit. Happens maybe once or twice in 2-3 month span.

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.

Where do you find better rewards for general purposes? I know there are plenty of better cards for travel, and I think there’s a few that are better for dining and other misc stuff, but Apple Card (w/ Apple Pay) seems to be the best in general at 2% for any purchase?

Wells Fargo, PayPal, SoFi, Citibank, and Fidelity[1] all offer 2% cash back on everything, unlimited, no annual fee. There's nothing special about that rate. Wells Fargo will even give you a $200 sign up bonus.

Depending on your specific spending habits you might even come out ahead with the Citi Custom Cash, which offers 5% cash back on your highest spending category (up to $500) every month, 1% cach back on everything else.

I have a credit card with Bank of America which I earn 2.625% cash back on everything, no annual fee. However, that rate requires having $100,000 invested with Merrill Lynch. - https://www.doctorofcredit.com/bank-of-america-preferred-rew...

[1]Fidelity requires you to have an investment account open with them to sign up, no minimum balance is required.

AMEX Gold seems to be the best bang for my buck. Four points on groceries (and dining out, but we don't do that much) with a family of 4 means I rack up something north of 60k points a year just on that.

That doesn't seem like a lot, but coupled with other spending it does help with going to visit my wife's family every few years. I cashed in 90k miles per ticket to get $500 business class round trip tickets on ANA last year. That means that roughly every 4 years we can do that trip for trivial travel cost.

Here's an example of a policy change due to criticism about the dispute issue: https://9to5mac.com/2022/02/11/apple-card-disputes-transacti...

I have a friend with the apple card and there was a bunch of fraud.

I think once before the replacement card even arrived.

I was just confused how this could this even happen? as far as I can tell, apple pay doesn't have a specific card number to type into the internet.

> because they wanted to promote using Apple Pay

This is because Apple (and Google, in the case of Google Pay) take a small small cut for each of those NFC transactions (somewhere like 15 basis points iirc, charged to the issuing card network).

I honestly cannot remember the last time I physically used a card to pay. I think I’ve exclusively used Apple Pay all year… (UK)

Paying with your phone is pretty ubiquitous here.

The US only got tap to pay widely in cards fairly recently, and you'll still run into a lot of point-of-sale systems that aren't properly configured or broken.

I was last in the US in October and it seems like tap to pay has gone ubiquitous there. I live in Mexico and it's available on maybe 5% of credit card terminals I use

Most of the terminals have the tap-to-pay icon, but in my area maybe 75% work. It's a bit of a crapshoot. You go to do it and the clerk'll say "oh it's broken".

Gas stations are worse. Maybe 1/3 in my area have pumps that support it.

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

My guess is the although Apple got great terms on the deal leading GS to lose money, they had a reputational risk with GS since the service was poor and GS had no incentive to invest in improving it.

As market get saturated with Apple devices and new sales are lower becoming finance company can keep generating growth and returns wall is street looking for.

Sounded like a forced marriage

But not a nasty divorce now.

It's ok they called off the wedding.

Paywall.

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.

I’ve exclusively used my Apple Card since launch and never had a problem. I used the virtual card for most of my services and everything else is Apple Pay. Been a great experience. I’ve got a hell of a lot more cash back than I got out of my AMEX card, the annual fee made a good chunk of it a wash.

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.

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.

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.

I replied to your other comment - I've not had this experience. Its been a rarely positive fintech experience for me.

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.

I've only had problems with the Apple Pay integration on Pizza Hut's website, of all things.

Ace Hardware’s POS didn’t work with _any_ NFC EMV cards for a while, not just Apple Pay / Apple Card.

I've never had a decline on the Apple Card and I don't even live in the US.

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