Comment by arcdigital | Hacker News Reader

Comment by arcdigital | Hacker News Reader

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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.

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