One year later, the Apple Card is a huge but controversial success

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in General Discussion
On August 20, 2019, Apple officially launched Apple Card with any US citizen able to apply. Since then it's been a hit, but it's faced controversy over everything from low reward rates to alleged sex discrimination.

Apple Card
Apple Card


In every sense bar one, Apple Card is a typical Apple product. It was rumored for years, it launched to fanfare and criticism, plus it was even thought of first by Steve Jobs. The difference is that apart from its titanium card, it's not hardware, and apart from its app, it's not really software either.

When we all look back to see exactly when Apple really pivoted from being a hardware company to a services one, we're going to be sure it was 2019. It might even be March 25, 2019, when Apple eschewed its regular launching of new MacBooks, iPads or education products.

Instead, those products were hurriedly announced in press releases ahead of the event, so that the day itself could be devoted to services. Most of the event was the announcement of Apple TV+, but Tim Cook also confirmed that the rumored Apple Card was coming.

This is another departure from the Apple of old. It's now rare for the company to reveal anything and conclude with the words "available today," but most of this event left us waiting a long time.

While Apple News+ was announced and launched, Apple TV+, Apple Arcade, and Apple Card were all given the full launch treatment -- bar an actual date.




Apple Card pre-history

We would end up waiting 148 days before Apple Card was available. But in truth, we'd really been waiting for something more like 15 years.

Following the departure of the GE Capital Apple Credit Card, used to exclusively buy Apple products, Steve Jobs proposed an Apple-branded credit card. It wasn't a casual thought, either, as the company went very far down the line of making it a reality.

Original marketing materials for what would have been an Apple Card in 2004. Notice the name on the card:  Richard O Croswell was an executive at MBNA at the time.
Original marketing materials for what would have been an Apple Card in 2004. Notice the name on the card: Richard O Croswell was an executive at MBNA at the time.


According to Apple's then advertising agent, Ken Segal, plans were sufficiently advanced that an ad campaign was mocked up and ready to go. Seemingly Jobs couldn't get the terms he wanted out of card companies like Mastercard, and he dropped the entire plan.

Tim Cook may not necessarily have got exactly the terms Apple wanted either, but he did negotiate a deal with Goldman Sachs that worked for both companies.

While Goldman Sachs has worked with Apple since Steve Jobs returned to Cupertino, it appears to have specifically negotiated about a credit card since sometime in 2018. The key difference between then and 2004, though, is that there was now Apple Pay.

Goldman Sachs reportedly wanted a consumer product, instead of its business-to-business financial offerings, and Apple had this extremely successful payment system. Launched in 2013, Apple Pay sees transactions across the US and 50 countries.

Waiting to launch

Based on the existing wide reach and high adoption of Apple Pay, the one group that didn't wait for the actual launch of Apple Card was the financial press. Investment banks such as HSBC predicted that the "large potential captive market" would mean a windfall for Apple and Goldman Sachs.

Jennifer Bailey, Apple's Vice President of Internet Services, and Apple Pay, announcing Apple Card
Jennifer Bailey, Apple's Vice President of Internet Services, and Apple Pay, announcing Apple Card


Basing calculations on the idea that around half of Apple's then 146-million adult users in the US could qualify, HSBC predicted net income up to $300 million in the first year and up to $1.5 billion by 2025.

We're now a year on from estimates and guesses, but Apple is unlikely to ever confirm details. However, it appears that Goldman Sachs' investment in Apple Card was serious, working out at $350 per user.

And Goldman Sachs specifically told its investors in October 2019 that Apple Card had gone quite well. It was "the most successful credit card launch ever," said the company.

Tim Cook said much the same in an Apple earnings call in July 2020. Asked about how buyers had adapted to the coronavirus lockdowns, Cook said that it was clear from Apple Card how things had moved.

"We saw changes in consumer spending as the shutdowns occurred and store closures occurred, we could we could see that across the Card," he said. "It affected the categories that you would guess the most like travel and, and entertainment etc."

"But overall," he continued, "if you sort of pull the lens out on the Apple Card, we're we're very happy with the number of people that have [one]."

"We believe based on what we've heard that it's the fastest rollout in the history of credit cards and so we feel very good about that," he concluded.




The controversies begin

Back when that rollout was beginning, Apple may have opened applications to all US citizens in August, but there were many people using it before then. They consisted of various trial runs, some Apple staff, and selected beta users. And some of them had problems.

Specifically, very shortly after the launch, they were already able to say that after a month's use, the titanium Apple Card showed wear. Apple's legion of support documents for Apple Card user quickly added one about how to take care of it -- and clean the titanium.

Speaking of titanium, though, it turned out that the card wasn't entirely made of that material, not absolutely entirely. For a start, the white finish is a coating, but people with a scanning electron microscope and not enough real work to do, dug further.

The University of Berkley reports that Apple Card is 90% titanium. The remainder is an alloy that chiefly comprises aluminum.

Vastly more serious was the controversy that began in November 2019 where Apple and Goldman were accused of sex discrimination. The first accusation came from David Heinemeier Hansson, then best known for creating Ruby on Rails, but now perhaps better known for complaining about the App Store and its treatment of his Hey email app.

The @AppleCard is such a fucking sexist program. My wife and I filed joint tax returns, live in a community-property state, and have been married for a long time. Yet Apple's black box algorithm thinks I deserve 20x the credit limit she does. No appeals work.

-- DHH (@dhh)


Although Apple promotes the card as having been "created by Apple," it's really curated by Goldman Sachs. That company, along with unspecified other partners, is the one that determines eligibility for the card and sets credit limits.

"We have not and never will make decisions based on factors like gender," responded Goldman Sachs Bank CEO Carey Halio said in statement. "In fact, we do not know your gender or marital status during the Apple Card application process."

As Goldman Sachs denied any gender bias in its credit ratings, Apple co-founder Steve Wozniak claimed to have seen a similar disparity between him and his partner. And then US Senators got on the case.

Goldman Sachs's Halio asked Apple Card holders to contact the company if they had received unexpected credit limits. "If you believe that your credit line does not adequately reflect your credit history because you may be in a similar situation, we want to hear from you," she said. "Based on additional information that we request, we will re-evaluate your credit line."

The New York Department of Financial Services announced in November 2019 that it would be formally conducting an investigation. As of August 2020, there has been no report.

You can now pay for an iPhone in instalments using Apple Card
You can now pay for an iPhone in instalments using Apple Card

Positives and negatives

In good news about Apple Card, December 2019 saw Apple add the ability for users to buy iPhones on their cards and pay in instalments. Apple Card offers 3% Daily Cash on purchases made from Apple, and despite the instalment plan, buying an iPhone counts as one purchase.

So this was both a long term aid to spreading the cost of a new iPhone, and it was an immediate benefit, too. Then in June 2020, Apple extended the programme to mean you can buy almost any Apple devices this way, just not an Apple Watch or an iPod touch for some reason.

There was also the way that to help people during the COVID-19 situation, Apple allowed Apple Card users to defer their March 2020 payments. The company continued to do that through April, June, July and so far including August too.

Similarly, depending on your point of view, Apple also launched a way to help people whose poor credit scores meant they were refused an Apple Card -- or Apple found a way to get more users. In July 2020, the company launched "Path to Apple Card," a program that helps them assess and improve their financial situation.

Included in the four-month program is advice that ranges from how reducing debt and paying on time helps. At the end of the program, users are invited to apply again for an Apple Card.

This launched alongside a new Apple Card financial health website. So there's definitely an educational element here, but arguably it was prompted by allegations that Apple and Goldman Sachs were accepting applicants with "sub prime" credit records.




Apple iterates on the Apple Card

We'll never know what changes or improvements Apple and Goldman Sachs may have done to their internal processes across the first year of Apple Card. However, as that year was coming to an end, Apple did launch a couple of new features that were surprisingly absent in the original release.

Specifically, it made some online changes. Whereas before, you could only pay off your Apple Card via your iPhone, from July 2020, Apple added a way to do it online.

Then Apple added a feature you could've sworn must've been there from the start. As of August 12, 2020, you can now use Apple Card to buy from the online Apple Store.

Apple Card 2.0

Although Apple could offer better rewards for using Apple Card, otherwise it's hard to see what could be added next.

Right now Apple Card appears to be working for potentially millions of people, perhaps undertaking billions of transactions. It's bringing those people some rewards, and some convenience, while presumably earning Apple a nice amount.

If it's only tenuously hardware, and tenuously software, this Apple Card service represents the new Apple in every way -- bar one.

Apple Card remains exclusively available in the United States. That's despite an early promise from Goldman Sachs, made before the card had even officially launched.

"We're going to start in the US," said Goldman Sachs International CEO Richard Gnodde, "but over time, absolutely, we will be thinking of international opportunities for it."

Whenever Apple has its "iPhone 12" September or October launch event , you know that Tim Cook will rattle off some figures about how great Apple is doing.

He's unlikely to break down any details, any more than Apple has during its legally-required earnings calls. But if Apple is to roll out Apple Card to more countries, and if it isn't going to announce that with a press release, maybe this event is when it will be revealed.



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Comments

  • Reply 1 of 23
    Thanks for not having this Americanist Toy in my country. It attracts the wrong people with the wrong intentions towards the wrong habits.
    And Tim knows it, because it’s part of his bottom of the pyramid strategy targeted at all Joe Six-packs that need that pseudo-titanium status symbol.
    And with Goldman Sachs involved, there will always be some hidden agenda or 3.
    What a great partner & self-interest icon is that.
    edited August 2020 razorpit
  • Reply 2 of 23
    Apple could always go after the mint/personal capital area.  
    Beatswatto_cobra
  • Reply 3 of 23
    lmasantilmasanti Posts: 162member
    Apple and Goldman have each one something to win with the launch of Apple Card.
    Apple its own card. Goldman, its first consumer product.
    Win-Win makes good partnership.

    The same has happened in 2007 iPhone's launch:
    Apple needs to launch a cellphone  and AT&T (ex-Cyngular) needed a ‘hit’ to grow its business.

    Win-win is —it's just my opinion— the same reason why the AppStore is a success: a win for users (safety, privacy); a win for developer (big audience, secured payments); and for Apple (more value for its products).
    Well… that's a win-win-win!
    randominternetpersonBeatspatchythepirateanantksundaramwatto_cobra
  • Reply 4 of 23
    tmaytmay Posts: 5,761member
    The Apple Card opens up a broad hardware and software payment and subscription program for consumers, which would be sufficient for me to look at the Apple Card when ASi devices start arriving.
    patchythepiratewatto_cobra
  • Reply 5 of 23
    pscooter63pscooter63 Posts: 1,064member
    As a consumer, it doesn’t get much simpler to manage my account day-to-day.  I treat it like an AmEx card that’s must be paid off each month, so no interest.  And the customer service options are broader (and easier).  Texting CS is so much less painful than being tethered to a voice call queue, or the uncertainty of email.  In short, loving the card.
    randominternetpersonjohnbearStrangeDaysneutrino23watto_cobra
  • Reply 6 of 23
    The article is a nice recap of the history of the Apple Card, but the headline is a bit misleading.  Today the Apple Card is no more "controversial" than Discover and AmEx.
    razorpitpscooter63StrangeDaysanantksundaramneutrino23watto_cobra
  • Reply 7 of 23
    SpamSandwichSpamSandwich Posts: 33,407member
    Thanks for not having this Americanist Toy in my country. It attracts the wrong people with the wrong intentions towards the wrong habits.
    And Tim knows it, because it’s part of his bottom of the pyramid strategy targeted at all Joe Six-packs that need that pseudo-titanium status symbol.
    And with Goldman Sachs involved, there will always be some hidden agenda or 3.
    What a great partner & self-interest icon is that.
    Someone needs their coffee.
    MplsPpscooter63Beatspatchythepiratewatto_cobra
  • Reply 8 of 23
    Repeating the unsubstantiated and spurious allegation from David Heinemeier Hansson is shameful. It has been a year now, and still, no evidence of any kind has surfaced to back up his allegations. What's overwhelmingly likely is that he applied first, and then his wife applied, and since their credit is linked, he had already exhausted the credit line available for them as a couple. Or, it possible that she just didn't have a very good income/credit history on her own. In any case, there is *zero* evidence that Apple or Goldman was discriminatory here, and much evidence to the contrary. Yet your article continues to describe this scurrilous accusation as "serious". 

    That's just poor editing. 
    BeatspatchythepirateStrangeDayswatto_cobra
  • Reply 9 of 23
    zoetmbzoetmb Posts: 2,628member
    Thanks for not having this Americanist Toy in my country. It attracts the wrong people with the wrong intentions towards the wrong habits.
    And Tim knows it, because it’s part of his bottom of the pyramid strategy targeted at all Joe Six-packs that need that pseudo-titanium status symbol.
    And with Goldman Sachs involved, there will always be some hidden agenda or 3.
    What a great partner & self-interest icon is that.
    Overreaction much?   I would guess that most people don't even carry the physical card.   I sure don't.   I use Apple Pay and most of the time I charge to the card, although I can also use Apple Pay with any other card that I hold including my debit card.  Most non-Apple purchases get 2% back and in the end that's a lot more than you get from affinity cards with reward programs where you usually get points that are worth $0.007 each.   

    And if people do carry the card because they like the way it looks, so the fk what?   No different than carrying an AMEX platinum card or any other card with "pretty" graphics. 

    Hidden agenda?   Yeah, Goldman-Sachs wants you not to pay the bill in full at the end of the month so they can charge interest and make money.   Anyone with smarts will NEVER pay interest on a credit card.   And I'm sure they collect data on your purchases, same as any other credit card.  

    The only time I don't use the Apple Card is when I'm purchasing from B&H, a giant electronics/computer/photography independent retailer in NY.   They have a credit card in which they credit back the sales tax, which is currently 8.875%, so that's a much larger savings.   So I would still buy Apple hardware from them, not from Apple.  

    Personally, I think your reaction borders on insanity.   Do you really believe that only Joe Six Packs carry credit cards?     Get over it.  It's not a big deal either way,.
    MplsPpscooter63BeatsSpamSandwichwatto_cobra
  • Reply 10 of 23
    MplsPMplsP Posts: 3,679member
    The article is a nice recap of the history of the Apple Card, but the headline is a bit misleading.  Today the Apple Card is no more "controversial" than Discover and AmEx.
    Agreed - the only controversy was the alleged sex discrimination, which in reality was Goldman Sachs. Judging by comments I saw, I'm not so sure it was sex discrimination as much as an inept scoring algorithm used by GS.
    Beatswatto_cobra
  • Reply 11 of 23
    johnbearjohnbear Posts: 160member
    Good rewards, easy to use and manage 
    Beats
  • Reply 12 of 23
    BeatsBeats Posts: 3,073member
    I'm waiting for Apple Card 2. More durable to wear and in space grey. Would love a jet black one where it just looks like a blank card.

    Also, what's stopping Apple from becoming a bank?

    David Hannson is a white knight moron. Everyone gets different terms. If my wife gets better terms is Apple Card RacIsT Too Me?!?!

    Thanks for not having this Americanist Toy in my country. It attracts the wrong people with the wrong intentions towards the wrong habits.
    And Tim knows it, because it’s part of his bottom of the pyramid strategy targeted at all Joe Six-packs that need that pseudo-titanium status symbol.
    And with Goldman Sachs involved, there will always be some hidden agenda or 3.
    What a great partner & self-interest icon is that.

    iPhone and iPad were also dismissed as toys but a CREDIT CARD?? How the hell is money a "toy"?

    patchythepirate
  • Reply 13 of 23
    When are they going to introduce the Apple Reverse Mortgage and which actor from an old TV series is going to be the spokesperson?
    SpamSandwichwatto_cobra
  • Reply 14 of 23
    So uh, what's the credit history difference between Mr. DHH and his wife? Is his name on everything of theirs? Is he the breadwinner of the house? Does his wife have a full career or is it a small part-time job? From a quick glance at his Twitter bio he's a pretty successful businessman, so I would be surprised if she isn't more of a stay-at-home-mom/works for fun type of woman because of no need for two full careers in the home. There are many reasons for why different credit limits could be given out. That his immediate for this was "muh Apple and Goldman-Sachs are SEXISTS!!!!" doesn't make me view him kindly.
    watto_cobra
  • Reply 15 of 23
    crowleycrowley Posts: 10,360member
    Beats said:
    I'm waiting for Apple Card 2. More durable to wear and in space grey. Would love a jet black one where it just looks like a blank card.
    Screw all that, make it thinner!
    anantksundaram
  • Reply 16 of 23
    Apple should do what they did with TV+, give users every iDevices or Mac purchases Apple Card automatically. No need for applications. 
    And they would be stupid to not plan to make iPhone a user’s personal bank. 
    edited August 2020
  • Reply 17 of 23
    Rayz2016Rayz2016 Posts: 6,957member
    Thanks for not having this Americanist Toy in my country. It attracts the wrong people with the wrong intentions towards the wrong habits.
    And Tim knows it, because it’s part of his bottom of the pyramid strategy targeted at all Joe Six-packs that need that pseudo-titanium status symbol.
    And with Goldman Sachs involved, there will always be some hidden agenda or 3.
    What a great partner & self-interest icon is that.
    Someone needs their coffee.
    And their medications. 
    watto_cobra
  • Reply 18 of 23
    Rayz2016Rayz2016 Posts: 6,957member

    MplsP said:
    The article is a nice recap of the history of the Apple Card, but the headline is a bit misleading.  Today the Apple Card is no more "controversial" than Discover and AmEx.
    Agreed - the only controversy was the alleged sex discrimination, which in reality was Goldman Sachs. Judging by comments I saw, I'm not so sure it was sex discrimination as much as an inept scoring algorithm used by GS.
    Or that he doesn’t have the same credit history as his wife. 
    StrangeDayswatto_cobra
  • Reply 19 of 23
    Great card, great service, with simple and obvious perks. Classy-looking too.

    I would, however, love for Apple to make the physical card a little less prone to scratching too easily and getting scuzzy (yes, I know I can request a replacement).
    watto_cobra
  • Reply 20 of 23
    lostkiwilostkiwi Posts: 638member
    Come on Apple - you have the kinks ironed out, how about releasing it to the rest of the world?  
    NZ wouldn't complain about "muh sexism' if we were the next country to get the card! :smile: 
    watto_cobra
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