Goldman Sachs may be trying to get out of its Apple Card deal

AppleInsiderAppleInsider
Posted:
in AAPL Investors edited June 2023

Goldman Sachs may be bleeding money faster than previously thought on Apple Card, and it is reportedly trying to escape its partnership with Apple.

Apple Card
Apple Card



A new report claims that Goldman Sachs is in conversation with American Express and possibly even General Motors to escape its Apple Card deal. Citing "people familiar with the discussions," the Wall Street Journal believes that it may take some time for Goldman Sachs to escape the partnership -- and Apple would have to agree.

If it manages to do so, getting out of Apple Card would end Goldman Sachs' ambitions in the consumer lending business. It has already taken other measures to do so, in both ceasing personal lending and trying to offload the home improvement financier GreenSky it bought in 2022.

Publicly, Goldman Sachs says that it remains committed to the Apple Card, despite losing money on the deal.

Goldman Sachs spent a lot of money to help launch Apple Card and its other consumer services. A report from January 13 revealed the bank's consumer credit division lost $1.2 billion across nine months in 2022, and the losses were primarily related to the Apple Card.

"In the consumer platforms, we did some things right. We didn't execute on some others," Goldman Sachs CEO David Solomon said in January. "We probably took on more than we should have, you know, too much, too quickly."

Goldman helped launch the Apple Card in 2019 and reportedly spent roughly $350 to acquire every new Apple Card customer. In 2022, it scaled back its efforts to turn its consumer savings business, Marcus, into a fully-fledged digital bank.

Executives of Goldman Sachs' collection of businesses known as Platform Solutions said in January 2023 its consumer division may break even in 2025, although that target was initially by the end of 2022.

"I think we now have a very good deposits business," Solomon said at the time. "We're working on our cards platform, and I think the partnership with Apple is going to pay meaningful dividends for the firm."

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Comments

  • Reply 1 of 55
    mikethemartianmikethemartian Posts: 1,473member
    There should be an expiration date on their contract with Apple. Contracts aren’t usually written to continue in perpetuity.
    williamlondontwokatmew
  • Reply 2 of 55
    netroxnetrox Posts: 1,482member
    Why is it bleeding? 
    JP234twokatmewwatto_cobra
  • Reply 3 of 55
    karmadavekarmadave Posts: 369member
    netrox said:
    Why is it bleeding? 
    Probably because banks make money on credit cards by charging late fees and high interest on customers who carry large balances and make the minimum payment. Keep  in mind, that a bank pays a fee to the company who processes the credit card transaction which in this case is Mastercard. Many Apple customers are more financially well-off and pay their entire balance off on-time. Good for Apple because of the incentives customers get on Apple products, but not so good for Goldman Sachs which likely loses money on every transaction.
    lolliverrezwitsFileMakerFellerAlex_Vwonkothesanecaladaniansdw2001twokatmewravnorodomFred257
  • Reply 4 of 55
    hmlongcohmlongco Posts: 563member
    There's a semi-well known term used by the banking and credit card industry for the people who pay off their balance each and every month.

    They call them "Deadbeats".
    JP234rezwitsbloggerblogAlex_VtwokatmewravnorodomeriamjhMplsPtmaybeowulfschmidt
  • Reply 5 of 55
    chutzpahchutzpah Posts: 392member
    Hahaha

    I'm not normally a fan of how Apple treat some of their partners, but in this case I'll make an exception.  Couldn't happen to a more wretched hive of scum and villainy.
    JP234rezwitsbloggerblogFileMakerFellerAlex_Vtwokatmewdarkvaderwatto_cobra
  • Reply 6 of 55
    mikethemartianmikethemartian Posts: 1,473member
    netrox said:
    Why is it bleeding? 
    The company that controls the brand makes the lion share of the profits. It is no different than when Sears was the major retailer in the country and owned the Kenmore brand and they were able to get washing machine manufacturers to build them for low cost and then Sears sold them at a high premium.
    twokatmewwilliamlondonwatto_cobra
  • Reply 7 of 55
    tannertannertannertannertannertanner Posts: 15member
    Not enough Apple Card holders below 660.
    JP234rezwitsFileMakerFellerwonkothesanekurai_kagewatto_cobra
  • Reply 8 of 55
    badmonkbadmonk Posts: 1,327member
    Apple is probably the first company to screw Goldman-Sachs rather than the other way around.  Good job
     Tim.
    JP234williamlondonFileMakerFellerAlex_Vtwokatmewhydrogenwatto_cobra
  • Reply 9 of 55
    robin huberrobin huber Posts: 4,014member
    Apple wants to be in the banking business so now is the time to either start one or buy one. When the Car comes around, having their own GMAC-type in house financing will be a boon. 
    edited June 2023 caladanianwatto_cobra
  • Reply 10 of 55
    forgot usernameforgot username Posts: 65member
    Goldman Sachs also badly managed the card. They made it impossible to use financial management apps like Quicken, let alone Quickbooks, or even to view activity on the web. Big spenders need those abilities. And Goldman hasn’t taken much advantage of the benefits of being iPhone-centric. How about free Apple products, or at least swag for good customers?  Free AirTag holders, which cost next to nothing. It comes off as amateur hour, with a pretty interface. 

    Most people don’t want to hassle with managing a card with a proprietary, annoying, interface. 
    edited June 2023 twokatmewravnorodomgrandact73MplsPwatto_cobra
  • Reply 11 of 55
    macguimacgui Posts: 2,418member
    Thousands for my conspicuous spending, not one cent for interest.

    I'm happy with the Card and don't care if G–S is the bank. The few inquiries I've had were handled very quickly and professionally. It felt like concierge banking. The only downside for me is the MC card instead of Visa. MC isn't excepted everywhere I want to be, but pretty much.

    I have to wonder if AMEX would give the Apple customer the same level of attention. I don't see them picking up the Card, but who knows.
    Alex_ViOS_Guy80twokatmewravnorodomwatto_cobra
  • Reply 12 of 55
    tahdigtahdig Posts: 1member
    If Goldman Sachs pulls out , what will happen to Apple savings ? Are they gonna get rid of it ? 
    watto_cobra
  • Reply 13 of 55
    M68000M68000 Posts: 847member
    hmlongco said:
    There's a semi-well known term used by the banking and credit card industry for the people who pay off their balance each and every month.

    They call them "Deadbeats".
    I want to be a deadbeat
    Alex_VJP234watto_cobra
  • Reply 14 of 55
    XedXed Posts: 2,822member
    Not enough Apple Card holders below 660.
    How are they making profits on the 730+ credit scores? I'd assume those people are not incurring fees.
    edited June 2023 twokatmewwilliamlondonwatto_cobra
  • Reply 15 of 55
    XedXed Posts: 2,822member

    karmadave said:
    netrox said:
    Why is it bleeding? 
    Probably because banks make money on credit cards by charging late fees and high interest on customers who carry large balances and make the minimum payment. Keep  in mind, that a bank pays a fee to the company who processes the credit card transaction which in this case is Mastercard. Many Apple customers are more financially well-off and pay their entire balance off on-time. Good for Apple because of the incentives customers get on Apple products, but not so good for Goldman Sachs which likely loses money on every transaction.
    I pay mine off every month, save for the 0% interest of 12 to 24 month installments for the various Apple products that I've financed through the card. I also use it for 2% to 3% back so except for selling my personal data they aren't making money off me.
    iOS_Guy80twokatmewwilliamlondondarkvaderkurai_kagewatto_cobra
  • Reply 16 of 55
    ralphieralphie Posts: 124member
    Like so many other Apple services, I’m guessing this too will be shuttered at some point.
  • Reply 17 of 55
    XedXed Posts: 2,822member
    ralphie said:
    Like so many other Apple services, I’m guessing this too will be shuttered at some point.
    Before there was the Apple Card from GS there was the longstanding Apple Store CC from Barclays which offered the same 3% back on Apple purchases. I don't Apple will dissolve this as this is typically a worthwhile endeavor for companies, which is why so many stores offer a branded CC.

    If anything, I'd expect the card to jump from GS to another financial institution, which may or may not be Apple themselves cutting out the middle man.
    twokatmewravnorodomdarkvaderkurai_kagewatto_cobra
  • Reply 18 of 55
    gatorguygatorguy Posts: 24,599member
    JP234 said:
    forgot username said:
    Goldman Sachs also badly managed the card. They made it impossible to use financial management apps like Quicken, let alone Quickbooks, or even to view activity on the web. Big spenders need those abilities. And Goldman hasn’t taken much advantage of the benefits of being iPhone-centric. How about free Apple products, or at least swag for good customers?  Free AirTag holders, which cost next to nothing. It comes off as amateur hour, with a pretty interface. 

    Most people don’t want to hassle with managing a card with a proprietary, annoying, interface. 
    Apple Card isn't for "most people." But for the rest of us, it's very desirable.
    I had expected it would be, but I declined their card offer. The terms weren't good compared to other cards in my wallet. 
  • Reply 19 of 55
    XedXed Posts: 2,822member
    gatorguy said:
    JP234 said:
    forgot username said:
    Goldman Sachs also badly managed the card. They made it impossible to use financial management apps like Quicken, let alone Quickbooks, or even to view activity on the web. Big spenders need those abilities. And Goldman hasn’t taken much advantage of the benefits of being iPhone-centric. How about free Apple products, or at least swag for good customers?  Free AirTag holders, which cost next to nothing. It comes off as amateur hour, with a pretty interface. 

    Most people don’t want to hassle with managing a card with a proprietary, annoying, interface. 
    Apple Card isn't for "most people." But for the rest of us, it's very desirable.
    I had expected it would be, but I declined their card offer. The terms weren't good compared to other cards in my wallet. 
    What other card do you have that gives you 3% back (or more) on Apple purchases plus 0% financing?
    MacProravnorodomwilliamlondonMplsPdarkvaderwatto_cobra
  • Reply 20 of 55
    tyler82tyler82 Posts: 1,110member
    I am a proud deadbeat + freeloader. Not only do I pay my balance off every month and pay 0 interest to the blood-suckers, I get about $1k / year in cash back from all my purchases. 
    MacProtwokatmewFred257darkvaderwatto_cobra
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