Apple & Goldman Sachs: Will They Pull it Off?
Having just one Apple product is not too common for the millions of Apple-users around the world; these loyalists live by the motto of “go big or go home.” Apple has been successful in establishing a brand for itself, and it has made it the norm for many customers to buy nearly every type of Apple product, as customers effectively create an Apple ecosystem for themselves. With the help of Goldman Sachs, Apple is finding new ways to be more involved in the lives of its loyal customers.
The Wall Street Journal reported that this coming Spring, Apple is planning to issue a Mastercard credit card with Goldman Sachs. Although Apple has not officially announced the news, rumors have it that new features on the iPhone, particularly in their Apple Wallet application, introduced by Apple in 2014 will serve as an electronic credit card. Similar to the rings seen with Apple’s fitness-tracking application, Apple Pay will have an additional feature that tracks users’ daily spending habits, sending notifications and allowing users to set self-imposed limits, and track credit card rewards.
As far as perks for card users go, members will earn about 2 percent cash-back on most purchases, and potentially more on Apple gadgets and services. After Apple announced their goal of reaching a service revenue of $50 billion for the year of 2020, Loup Ventures, an investment and research firm, estimated Apple’s 2019 service revenue at $45 billion. They found that close to $1 billion of that was from Apple Pay; however, this is with only 25 percent of U.S. iPhone users having activated Apple Pay.
Apple is not alone in their attempt to expand the role they play in their customers’ lives. In an effort to make this both a successful and efficient venture, Goldman Sachs is adding customer-support call centers around the country, and is also working on building an internal system to handle payments. This project has a reported budget of $200 million, and is one of new Goldman CEO David Solomon’s major new initiatives. The bank hopes this card will help gain more customers and broaden the scope of their retail banking services.
Apple has not listed the specific requirements to be eligible for their card aside for being an iPhone user. However, the features they are integrating provide reason to believe that anyone can be a member, even someone with a low credit score. A credit score is a numerical expression that measures the risk a lender may be taking when dealing with you. A bank, for example, pays close attention to a client’s credit score when issuing a loan. Apple, with their history of student deals, also hopes to acquire students looking for their first credit cards, in an effort to keep them in the broader Apple family.
Matt Schulz, chief industry analyst at CompareCards.com, explained that despite their cache, in today’s competitive credit card marketplace, Apple and Goldman will not have an easy time acquiring customers. Others claim the poor performance with Apple’s Barclaycard Visa gives no reason to believe the card with Goldman Sachs will work out any better. Apple, however, has more than proven themselves to be a successful tech company, and, in my opinion, will only continue successfully infiltrating our lives, for better or for worse. As with all great ideas, only time will tell if Apple and Goldman have hit the jackpot.