The main problem with the Apple Card and Goldman Sachs is that most of the people with an Apple Card pay off their balances every month. This results in Goldman Sachs not making any money on interest charges.
Reportedly they do not, and making things worse the default rate is said to be high, close to that of a sub-prime cardholder.
What happened with Apple’s relationship with Barclays? I seem to remember using Barclays relationship with Apple to get interest free financing to purchase a couple of my earlier Macs and possibly iPads.
Perhaps partnering with a non-US based bank may make it easier to roll out support for Apple Card more globally.
Ultimately, shouldn’t we expect that Apple Card would be supported by multiple partners, similar to Mastercard and Visa?
You have made a common error by someone not familiar with the basics of the consumer credit card industry.
Mastercard and Visa aren't credit cards: they are payment networks. American Express is both a credit card company and a payment network.
Technically, the Apple Card is a Mastercard issued by Goldman Sachs USA, NA. It says so in the fine print of the service agreement that any Apple Cardholder accepted (by clicking "Accept"). In that way, it's similar to a VentureOne Mastercard issued by CapitalOne.
Barclays Bank would be the issuing bank. It's almost certain that Apple had discussions with Barclays Bank about the Apple Card (before it debuted) before Apple selected Goldman Sachs as a partner.
Apple would have to partner with banks from other countries to service customers in those areas. But those banks have to have a business in the country and follow the banking regulations of that country as well. It's not like an random American can apply for a JCB card (a Japanese card) or a UK card.
To have American cardholders, Apple needs to find a bank located in the USA (which would be subject to US consumer banking laws, not those of the UK, Japan, Nigeria, wherever.
Excellent insight and enlightenment. Thank you, You are correct, my exposure to credit card payment systems is solely as an end user. Barclays previous relationship with Apple lasted several years and was a benefit to me on a few occasions. That is why I was surprised when they were not part of the Apple Card deal.
Despite being a newbie when it comes to the credit card industry, I actually use credit cards extensively as a means to avoid carrying excessive cash. I never use debit cards. My go-to card has long been Discover because they have always had exceptional customer service when I’ve had to deal with them. But when I travel outside of the US, they have not been well supported so I have to carry either a Visa or Mastercard too. Perhaps I’d be better served with an Apple Card with it being a Mastercard and having some Apple related benefits.
The only other exposure I’ve had with credit cards is company issued credit cards. Things may have changed over time, but I recall that unlike Visa/Mastercard, American Express was often a struggle to use outside of the US, at least for some expenses. I’m curious whether the Apple Card is widely used for company issued credit cards? Speaking of Japan, at least in the late ‘90s, business travel there was a struggle with any credit card, regardless of the issuer or sovereignty of the issuer. Everything was cash-only, even hotels. Hopefully that’s improved.
For those of us outside the USA who have been waiting for 4+ years for this service, with no hint of it arriving in our countries, we kinda hope the service will die in the USA. Apple needs to think worldwide, and not provide services to Americans only. How many other Apple services are available in the US only?
Which worldwide issuing bank works with every single country in the world?
Citi
Not even close. They are big, but not the biggest. They don't even a ground presence in half the world's countries.
You don’t need a ground presence to issue a credit card.
They are in most countries.
Besides, Apple does not need to worry about regulations, they just slap their name on any issuer. They can also use MBNA, a big white label credit card issuer.
What happened with Apple’s relationship with Barclays? I seem to remember using Barclays relationship with Apple to get interest free financing to purchase a couple of my earlier Macs and possibly iPads.
Perhaps partnering with a non-US based bank may make it easier to roll out support for Apple Card more globally.
Ultimately, shouldn’t we expect that Apple Card would be supported by multiple partners, similar to Mastercard and Visa?
You have made a common error by someone not familiar with the basics of the consumer credit card industry.
Mastercard and Visa aren't credit cards: they are payment networks. American Express is both a credit card company and a payment network.
Technically, the Apple Card is a Mastercard issued by Goldman Sachs USA, NA. It says so in the fine print of the service agreement that any Apple Cardholder accepted (by clicking "Accept"). In that way, it's similar to a VentureOne Mastercard issued by CapitalOne.
Barclays Bank would be the issuing bank. It's almost certain that Apple had discussions with Barclays Bank about the Apple Card (before it debuted) before Apple selected Goldman Sachs as a partner.
Apple would have to partner with banks from other countries to service customers in those areas. But those banks have to have a business in the country and follow the banking regulations of that country as well. It's not like an random American can apply for a JCB card (a Japanese card) or a UK card.
To have American cardholders, Apple needs to find a bank located in the USA (which would be subject to US consumer banking laws, not those of the UK, Japan, Nigeria, wherever.
Excellent insight and enlightenment. Thank you, You are correct, my exposure to credit card payment systems is solely as an end user. Barclays previous relationship with Apple lasted several years and was a benefit to me on a few occasions. That is why I was surprised when they were not part of the Apple Card deal.
Despite being a newbie when it comes to the credit card industry, I actually use credit cards extensively as a means to avoid carrying excessive cash. I never use debit cards. My go-to card has long been Discover because they have always had exceptional customer service when I’ve had to deal with them. But when I travel outside of the US, they have not been well supported so I have to carry either a Visa or Mastercard too. Perhaps I’d be better served with an Apple Card with it being a Mastercard and having some Apple related benefits.
The only other exposure I’ve had with credit cards is company issued credit cards. Things may have changed over time, but I recall that unlike Visa/Mastercard, American Express was often a struggle to use outside of the US, at least for some expenses. I’m curious whether the Apple Card is widely used for company issued credit cards? Speaking of Japan, at least in the late ‘90s, business travel there was a struggle with any credit card, regardless of the issuer or sovereignty of the issuer. Everything was cash-only, even hotels. Hopefully that’s improved.
1) I imagined that Barclay's was approached, but the deals were probably not favorable to them when Apple laid out what they wanted. GS not having ever been an issue of a CC took a risk and it didn't work out, which is unfortunate for them. The question now is who will take over and will the current setup still be in place or will Apple have to make concessions?
2) In this day and age people should avoid cash when they can. If your card is lost or stolen you don't lose anything (except personal information, but to be fair that's already out there on the internet).
3) I use Amex when I travel but MS is still the most accepted.
For those of us outside the USA who have been waiting for 4+ years for this service, with no hint of it arriving in our countries, we kinda hope the service will die in the USA. Apple needs to think worldwide, and not provide services to Americans only. How many other Apple services are available in the US only?
Which worldwide issuing bank works with every single country in the world?
Citi
Not even close. They are big, but not the biggest. They don't even a ground presence in half the world's countries.
You don’t need a ground presence to issue a credit card.
They are in most countries.
Besides, Apple does not need to worry about regulations, they just slap their name on any issuer. They can also use MBNA, a big white label credit card issuer.
1) You are missing the point even though your four letter comment suggested they are. They aren't in all countries, which is what your comment is claiming despite a lack of proof. But that's because there isn't a world credit card system in place. Even MS isn't even everywhere and they're the largest payment-processing corporation worldwide. To reiterate, each nation has regulations for an issuing bank, and while Citi can be present in the US and Canada, they do have to set up in each country to issue a card in those countries.
2) Apple doesn't have to worry about regulations? Just slap their name on it? Sure! Nothing illegal about that. 🙄
Consumer banking is one of the most heavily regulated industries. Apple has zero interest becoming a bank. If this weren't the case, Apple would have started a bank a long time ago (before they partnered with Barclay Bank for the Apple Card predecessor), decades ago.
This is also why many companies have divested their consumer loan divisions. And with each passing year, there are more banking regulations, not less.
Apple doesn't want consumer debt as a liability.
And as it turns out, neither does Goldman Sachs.
I'm highly skeptical that consumer banking regulations are any more of an obstacle than the wide range of other obstacles Apple faces across their product lineup. For example, I'll bet the challenges of navigating the patent minefield of the cellular landscape is significantly harder (and explains the challenges Apple has had making a competitive 5g modem). I'm sure entering the TV/movie production business was no walk in the park either, what with the various union contracts and entrenched players. Getting approval for health related features of the Watch is also a challenge, but Apple is up to the challenge. If somebody were to give a detailed explanation of the challenges of EUV, you'd likely conclude that's impossible, too. The bottom line is that if you want to create any competitive product in the modern economy it is going to be "hard" and you can always come up with a long list of costs and obstacles to explain why nothing is possible. Quitters never win.
I think it's quite possible that Apple will buy or start a bank on their own. I suspect the real issue with the GS partnership is that GS just doesn't have the long term vision and patience that Apple does. Apple was willing to run the App Store for a loss or at break even for a long time before turning a profit -- now 'services' are a huge profit center. I suspect Apple is perfectly happy to do the same thing with banking, realizing that once the volume is high enough and the business model refined enough, it will be profitable. And in the meantime, it creates more platform stickiness and customer good-will.
A lot of people attacked me (even personally!) for saying "Apple needs to think worldwide." Is there anything in that statement that merits personal attacks? And why didn't anyone attempt to answer my question?
You made a selfish and foolish comment. If I had said, as an American, no one else In the world should have modern, universal healthcare because the US doesn't have it, don't you think I'd sound like a complete asshole for suggesting that everyone else should suffer because a certain country has laws that make progress difficult in a certain area?
That's a fair point, but the reason I didn't see it that way because most of them were responding specifically to the worldwide aspect. none of them were commenting about the "dying in the US" aspect.
For those of us outside the USA who have been waiting for 4+ years for this service, with no hint of it arriving in our countries, we kinda hope the service will die in the USA. Apple needs to think worldwide, and not provide services to Americans only. How many other Apple services are available in the US only?
Which worldwide issuing bank works with every single country in the world?
Citi
Not even close. They are big, but not the biggest. They don't even a ground presence in half the world's countries.
You don’t need a ground presence to issue a credit card.
They are in most countries.
Besides, Apple does not need to worry about regulations, they just slap their name on any issuer. They can also use MBNA, a big white label credit card issuer.
1) You are missing the point even more than your original post. Citi is not in all countries, which is what your comment is claiming. But it can't be because there's no worldwide credit card system in place to allow that to happen. Even MC isn't everywhere and they're the largest payment-processing corporation in the world. To reiterate, each nation has regulations for an issuing bank, and while Citi can be present in both the US and Canada, for example, they do have to set up in each country to issue cards in those countries.
2) Apple doesn't have to worry about regulations? Just slap their name on it? Sure! Nothing illegal about that. 🙄
A lot of people attacked me (even personally!) for saying "Apple needs to think worldwide." Is there anything in that statement that merits personal attacks? And why didn't anyone attempt to answer my question?
You made a selfish and foolish comment. If I had said, as an American, no one else In the world should have modern, universal healthcare because the US doesn't have it, don't you think I'd sound like a complete asshole for suggesting that everyone else should suffer because a certain country has laws that make progress difficult in a certain area?
That's a fair point, but the reason I didn't see it that way because most of them were responding specifically to the worldwide aspect. none of them were commenting about the "dying in the US" aspect.
That is your assumption. The people who attacked you personally - It was entirely due to "dying in the US" aspect. Again - I am not saying that is the right justification, but it is what it is.
Other posts on practical challenges on launching the Apple card worldwide - You should not treat them as "attack" directed towards you. They are counter-arguments to your argument on worldwide launch being a necessary aspect of any product/service launch by Apple. This is a discussion forum, so arguments/counter-arguments are part of life. You have to expect that to be the case. If you don't like to see counter-arguments, then you should not make the argument in the first place.
What happened with Apple’s relationship with Barclays? I seem to remember using Barclays relationship with Apple to get interest free financing to purchase a couple of my earlier Macs and possibly iPads.
Perhaps partnering with a non-US based bank may make it easier to roll out support for Apple Card more globally.
Ultimately, shouldn’t we expect that Apple Card would be supported by multiple partners, similar to Mastercard and Visa?
You have made a common error by someone not familiar with the basics of the consumer credit card industry.
Mastercard and Visa aren't credit cards: they are payment networks. American Express is both a credit card company and a payment network.
Technically, the Apple Card is a Mastercard issued by Goldman Sachs USA, NA. It says so in the fine print of the service agreement that any Apple Cardholder accepted (by clicking "Accept"). In that way, it's similar to a VentureOne Mastercard issued by CapitalOne.
Barclays Bank would be the issuing bank. It's almost certain that Apple had discussions with Barclays Bank about the Apple Card (before it debuted) before Apple selected Goldman Sachs as a partner.
Apple would have to partner with banks from other countries to service customers in those areas. But those banks have to have a business in the country and follow the banking regulations of that country as well. It's not like an random American can apply for a JCB card (a Japanese card) or a UK card.
To have American cardholders, Apple needs to find a bank located in the USA (which would be subject to US consumer banking laws, not those of the UK, Japan, Nigeria, wherever.
Excellent insight and enlightenment. Thank you, You are correct, my exposure to credit card payment systems is solely as an end user. Barclays previous relationship with Apple lasted several years and was a benefit to me on a few occasions. That is why I was surprised when they were not part of the Apple Card deal.
Despite being a newbie when it comes to the credit card industry, I actually use credit cards extensively as a means to avoid carrying excessive cash. I never use debit cards. My go-to card has long been Discover because they have always had exceptional customer service when I’ve had to deal with them. But when I travel outside of the US, they have not been well supported so I have to carry either a Visa or Mastercard too. Perhaps I’d be better served with an Apple Card with it being a Mastercard and having some Apple related benefits.
The only other exposure I’ve had with credit cards is company issued credit cards. Things may have changed over time, but I recall that unlike Visa/Mastercard, American Express was often a struggle to use outside of the US, at least for some expenses. I’m curious whether the Apple Card is widely used for company issued credit cards? Speaking of Japan, at least in the late ‘90s, business travel there was a struggle with any credit card, regardless of the issuer or sovereignty of the issuer. Everything was cash-only, even hotels. Hopefully that’s improved.
For you and others who don't know how credit cards work, here's a basic explanation. When you visit a Merchant X and decide to pay with Credit Card A, they will swipe your card. Through a payment network (Visa, MC, AMEX, Discover, JCB, etc.) they will contact the card issuing bank. Customer wants to pay, authorize charge? If the payment is authorized, Credit Card issuing bank A pays the merchant (or technically the merchant's bank). Now Credit Card issuing bank A has paid for your purchase with their cash. From the service agreement, you are responsible for paying that debt back to Issuing Bank A. That's the agreement you signed with Issuing Bank A, the fine print you have never bothered to read. You don't owe Merchant X anything more, they got paid by Issuing Bank A. You OWE Credit Card Issuing Bank A, that's why you get a statement from them. To Bank A there's a liability associated with you as a creditor. That's why there are interest charges, late fees, etc.
And your credit score is partly related to that debt. Remember that a credit score is a numerical figure that represents the likeliness that you will pay your debts.
My credit score is around 825-830. That means that I have an extremely high chance that I will pay off my debts. Guess what? I haven't paid any credit card fees or interest in probably 25 years. I'm what the consumer credit industry calls a "deadbeat" -- someone who pays off their entire balance due immediately, generating no additional revenue.
Forget to make the required minimum payment? Credit card issuing bank will tell a credit reporting agency, "Hey, this guy is a slacker. He missed a payment" (it's called a derogatory). Credit agency sees this as recalculates a lower score: you are less likely to pay off your debts based on payment history.
When you use a debit card, the merchant's bank uses the payment network (Visa, Mastercard) to contact your personal bank. That's why a debit charge will hit your checking account immediately. Your bank looked at the authorization request and said, "Yes, our client has the funds for this transaction." This is why debit card transactions don't affect credit cards scores. There's nothing owed. You buy something and if the charge is authorized, you have less cash. There's no debt, you have fewer funds.
The Apple Card is a decent card to consider for international travel because it incurs no foreign transaction fees. Of course, there are other cards that predate the Apple Card that offer the same benefit. The Visa card issued by my credit union is one. There's at least one MC card issued by CapitolOne that also waives foreign transaction fees. Some (but not all) of the American Express cards offer this benefit.
Things have changed. More of the world accepts credit cards including American Express (which was hard to use in the late 20th century). Also, policies for company related travel have changed. Compared to 20 years ago, it's far more common for companies to not issue company cards to employees. Employees who do travel for the company use their own credit cards and fill out expense reports to be reimbursed. There are modern ways to do this with apps and services (like Concur) to automate the expense reporting workflow.
As for Japan, yes, they accept credit cards more these days. All travel can be done with credit cards. They have also gone nuts for touchless payment. Initially it was JR's Suica card (an NFC touchless transit pass) that started the trend. More and more vendors started adding the Suica card as a payment option. Then it went crazy. This happened around 2005 with the invention of the pre-smartphone "osaifu keitai" (literally "wallet phone"). Now people could use their phones as transit passes, movie & event tickets, payment for convenience stores, etc. Eventually other transit agencies and companies launched payment cards (Tokyo Metro has their well accepted Pasmo card).
These days traveling in Japan, I can pay for most things with my phone using the Suica express transit pass or via a credit card linked to Apple Pay. You can even ride Kyoto buses with a Tokyo Metro Pasmo card. The USA is maybe ten years behind Japan in NFC contactless payment integration, especially when it comes to transit.
It's amazing how little many people know about the consumer credit world despite the fact that most daily transactions by Joe Consumer in the USA are transacted on credit cards. And yes, it's worth learning the basics. Consumer credit scores aren't just used for setting mortgage eligibility anymore. They are now used in an ever increasingly wide variety of applications. In the long run, having a higher credit score will save you money in interest payments for things like mortgages and vehicle loans even if you pay off your credit cards every month. Who wouldn't want to knock off $100 of their monthly mortgage payment? Over a thirty-year mortgage, that would be $36,000 in savings.
Consumer banking is one of the most heavily regulated industries. Apple has zero interest becoming a bank. If this weren't the case, Apple would have started a bank a long time ago (before they partnered with Barclay Bank for the Apple Card predecessor), decades ago.
This is also why many companies have divested their consumer loan divisions. And with each passing year, there are more banking regulations, not less.
Apple doesn't want consumer debt as a liability.
And as it turns out, neither does Goldman Sachs.
I'm highly skeptical that consumer banking regulations are any more of an obstacle than the wide range of other obstacles Apple faces across their product lineup. For example, I'll bet the challenges of navigating the patent minefield of the cellular landscape is significantly harder (and explains the challenges Apple has had making a competitive 5g modem). I'm sure entering the TV/movie production business was no walk in the park either, what with the various union contracts and entrenched players. Getting approval for health related features of the Watch is also a challenge, but Apple is up to the challenge. If somebody were to give a detailed explanation of the challenges of EUV, you'd likely conclude that's impossible, too. The bottom line is that if you want to create any competitive product in the modern economy it is going to be "hard" and you can always come up with a long list of costs and obstacles to explain why nothing is possible. Quitters never win.
I think it's quite possible that Apple will buy or start a bank on their own. I suspect the real issue with the GS partnership is that GS just doesn't have the long term vision and patience that Apple does. Apple was willing to run the App Store for a loss or at break even for a long time before turning a profit -- now 'services' are a huge profit center. I suspect Apple is perfectly happy to do the same thing with banking, realizing that once the volume is high enough and the business model refined enough, it will be profitable. And in the meantime, it creates more platform stickiness and customer good-will.
Apple isn't going to buy/start a bank. They've had plenty of opportunity (and cash) for the past 10-15 years. There are easier ways to make money. Hell, Apple would be better off selling life insurance than running a consumer bank.
They aren't going to buy or start a mobile network either.
It makes me like Apple a tiny bit more because they worked a credit card deal that serves consumers so well that the issuing bank wants out of the deal. Usually it's the other way around. Despite the discount/refund for Apple purchases, I haven't signed up for an Apple card, specifically because I don't trust Goldman Sachs. The idea that having the card and paying it off each month really would be an irritant to one of the perpetrators of the 2008 financial crisis almost makes me want to get one.
Apple ran ads claiming the Apple Card wasn’t issued by a bank?
I'd like to see these ads.
There were none.
Apple has never claimed that the Apple Card didn't have an issuing bank. Goldman Sachs USA, NA was buried in the fine print in the original announcement, I spend a few minutes tracking down the service agreement because that's where all the important details are.
Apple couldn't claim there was no issuing bank, that would have been fraudulent and deceptive. That would also invite a huge amount of liability and potential future legal action. They just said "visit this URL to learn more" and the fine print was lurking somewhere in a hyperlink.
As is so typical of any consumer finance discussion on the Internet these days, this thread is full of inaccuracies and incorrect assumptions by many participants.
It's worth pointing out that Apple has repeatedly stated that they are not an issuing bank and thus Apple Pay should not be subject to the same scrutiny as consumer financial institutions and payment networks. Even Apple Cash is operated by Green Bank NA.
I completely understand G.S. not wanting every bill to be due on the 1st of the month. Imagine you're a retailer and all your customers come in on the 1st, leaving you with no customers days 2-30. It's unreasonable of Apple to have G.S. have to handle an onslaught of bills just one day of the month and not be willing to spread them out. As an Apple Card customer, I'd be fine having mine not be on the 1st, but Apple has never bothered to ask.
Then why did they sign the agreement? Was Apple holding a gun to their head? Apple Card is designed to help people pay off their debt, having a bill due on the 1st is easy to remember.
I don't know if there are statistics out but I would make a bet that AppleCard users have higher incomes and are smarter with their money than the average credit card consumer. This would be a loss in an industry that survives only on high interest rates charged when people f-up or don't pay their entire bill on time. The high-yield savings rate and instant cash back rewards loses these banks money when their customers are actually responsible by paying their bills on time and not spending beyond their means.
That comes with regular visits from bank examiners from the FDIC, Federal Reserve and either the Office of the Comptroller of the Currency or state banking regulator (depending if national or state charter). Those bank regulators don’t need warrants to access customer records so it wouldn’t fit in with Apple’s image of privacy first.
All banks come with significant risk though so it should be run independently from Apple and a partnership would be easier/faster. They could always buy a controlling interest in a bank to gain leverage.
The most useful payment system to have is a wallet like Paypal/Venmo etc rather than a loan/credit system.
Having Apple Cash internationally as an alternative to a bank balance would be a good option for a lot of people and very low risk. If they are going to have a credit system, they need to start slowly and make sure they have profitable customers.
That comes with regular visits from bank examiners from the FDIC, Federal Reserve and either the Office of the Comptroller of the Currency or state banking regulator (depending if national or state charter). Those bank regulators don’t need warrants to access customer records so it wouldn’t fit in with Apple’s image of privacy first.
I'd rather have visits from banking regulators than visits from the CCP/PLA. Yet Apple operates in China. If they can handle that, I'm sure they can handle banking regulators.
Consumer banking is one of the most heavily regulated industries. Apple has zero interest becoming a bank. If this weren't the case, Apple would have started a bank a long time ago (before they partnered with Barclay Bank for the Apple Card predecessor), decades ago.
This is also why many companies have divested their consumer loan divisions. And with each passing year, there are more banking regulations, not less.
Apple doesn't want consumer debt as a liability.
And as it turns out, neither does Goldman Sachs.
I'm highly skeptical that consumer banking regulations are any more of an obstacle than the wide range of other obstacles Apple faces across their product lineup. For example, I'll bet the challenges of navigating the patent minefield of the cellular landscape is significantly harder (and explains the challenges Apple has had making a competitive 5g modem). I'm sure entering the TV/movie production business was no walk in the park either, what with the various union contracts and entrenched players. Getting approval for health related features of the Watch is also a challenge, but Apple is up to the challenge. If somebody were to give a detailed explanation of the challenges of EUV, you'd likely conclude that's impossible, too. The bottom line is that if you want to create any competitive product in the modern economy it is going to be "hard" and you can always come up with a long list of costs and obstacles to explain why nothing is possible. Quitters never win.
I think it's quite possible that Apple will buy or start a bank on their own. I suspect the real issue with the GS partnership is that GS just doesn't have the long term vision and patience that Apple does. Apple was willing to run the App Store for a loss or at break even for a long time before turning a profit -- now 'services' are a huge profit center. I suspect Apple is perfectly happy to do the same thing with banking, realizing that once the volume is high enough and the business model refined enough, it will be profitable. And in the meantime, it creates more platform stickiness and customer good-will.
Apple isn't going to buy/start a bank. They've had plenty of opportunity (and cash) for the past 10-15 years. There are easier ways to make money. Hell, Apple would be better off selling life insurance than running a consumer bank.
They aren't going to buy or start a mobile network either.
Apple had plenty of time, cash, and motivation to develop their own silicon for Macs. Some people predicted it -- or at least yearned for it -- for years. Many said it wouldn't happen because it's just sooo hard, or if they were going to do it they would have already done it, or that they don't have the scale to do it profitably, etc etc. And now, guess what, they did it.
ApplePay and AppleCard are very clear indicators that Apple is interested in participating in the market for financial services. Funny how so many people can't see what's right tin front of them.
Comments
To the best of my knowledge, they always acknowledged GS as the issuing bank.
EDIT: Here's the original announcement
https://www.apple.com/newsroom/2019/08/apple-card-launches-today-for-all-us-customers/
Despite being a newbie when it comes to the credit card industry, I actually use credit cards extensively as a means to avoid carrying excessive cash. I never use debit cards. My go-to card has long been Discover because they have always had exceptional customer service when I’ve had to deal with them. But when I travel outside of the US, they have not been well supported so I have to carry either a Visa or Mastercard too. Perhaps I’d be better served with an Apple Card with it being a Mastercard and having some Apple related benefits.
The only other exposure I’ve had with credit cards is company issued credit cards. Things may have changed over time, but I recall that unlike Visa/Mastercard, American Express was often a struggle to use outside of the US, at least for some expenses. I’m curious whether the Apple Card is widely used for company issued credit cards? Speaking of Japan, at least in the late ‘90s, business travel there was a struggle with any credit card, regardless of the issuer or sovereignty of the issuer. Everything was cash-only, even hotels. Hopefully that’s improved.
2) In this day and age people should avoid cash when they can. If your card is lost or stolen you don't lose anything (except personal information, but to be fair that's already out there on the internet).
3) I use Amex when I travel but MS is still the most accepted.
https://upgradedpoints.com/credit-cards/visa-vs-amex-vs-mastercard/
4) Interesting about Japan. It looks like they still prefer cash. I wonder how the young people feel.
https://www.cashmatters.org/blog/why-japan-prefers-cash
2) Apple doesn't have to worry about regulations? Just slap their name on it? Sure! Nothing illegal about that. 🙄
I think it's quite possible that Apple will buy or start a bank on their own. I suspect the real issue with the GS partnership is that GS just doesn't have the long term vision and patience that Apple does. Apple was willing to run the App Store for a loss or at break even for a long time before turning a profit -- now 'services' are a huge profit center. I suspect Apple is perfectly happy to do the same thing with banking, realizing that once the volume is high enough and the business model refined enough, it will be profitable. And in the meantime, it creates more platform stickiness and customer good-will.
2) Apple doesn't have to worry about regulations? Just slap their name on it? Sure! Nothing illegal about that. 🙄
[Can't make edits right now for some reason.]
Other posts on practical challenges on launching the Apple card worldwide - You should not treat them as "attack" directed towards you. They are counter-arguments to your argument on worldwide launch being a necessary aspect of any product/service launch by Apple. This is a discussion forum, so arguments/counter-arguments are part of life. You have to expect that to be the case. If you don't like to see counter-arguments, then you should not make the argument in the first place.
And your credit score is partly related to that debt. Remember that a credit score is a numerical figure that represents the likeliness that you will pay your debts.
My credit score is around 825-830. That means that I have an extremely high chance that I will pay off my debts. Guess what? I haven't paid any credit card fees or interest in probably 25 years. I'm what the consumer credit industry calls a "deadbeat" -- someone who pays off their entire balance due immediately, generating no additional revenue.
Forget to make the required minimum payment? Credit card issuing bank will tell a credit reporting agency, "Hey, this guy is a slacker. He missed a payment" (it's called a derogatory). Credit agency sees this as recalculates a lower score: you are less likely to pay off your debts based on payment history.
When you use a debit card, the merchant's bank uses the payment network (Visa, Mastercard) to contact your personal bank. That's why a debit charge will hit your checking account immediately. Your bank looked at the authorization request and said, "Yes, our client has the funds for this transaction." This is why debit card transactions don't affect credit cards scores. There's nothing owed. You buy something and if the charge is authorized, you have less cash. There's no debt, you have fewer funds.
The Apple Card is a decent card to consider for international travel because it incurs no foreign transaction fees. Of course, there are other cards that predate the Apple Card that offer the same benefit. The Visa card issued by my credit union is one. There's at least one MC card issued by CapitolOne that also waives foreign transaction fees. Some (but not all) of the American Express cards offer this benefit.
Things have changed. More of the world accepts credit cards including American Express (which was hard to use in the late 20th century). Also, policies for company related travel have changed. Compared to 20 years ago, it's far more common for companies to not issue company cards to employees. Employees who do travel for the company use their own credit cards and fill out expense reports to be reimbursed. There are modern ways to do this with apps and services (like Concur) to automate the expense reporting workflow.
As for Japan, yes, they accept credit cards more these days. All travel can be done with credit cards. They have also gone nuts for touchless payment. Initially it was JR's Suica card (an NFC touchless transit pass) that started the trend. More and more vendors started adding the Suica card as a payment option. Then it went crazy. This happened around 2005 with the invention of the pre-smartphone "osaifu keitai" (literally "wallet phone"). Now people could use their phones as transit passes, movie & event tickets, payment for convenience stores, etc. Eventually other transit agencies and companies launched payment cards (Tokyo Metro has their well accepted Pasmo card).
These days traveling in Japan, I can pay for most things with my phone using the Suica express transit pass or via a credit card linked to Apple Pay. You can even ride Kyoto buses with a Tokyo Metro Pasmo card. The USA is maybe ten years behind Japan in NFC contactless payment integration, especially when it comes to transit.
It's amazing how little many people know about the consumer credit world despite the fact that most daily transactions by Joe Consumer in the USA are transacted on credit cards. And yes, it's worth learning the basics. Consumer credit scores aren't just used for setting mortgage eligibility anymore. They are now used in an ever increasingly wide variety of applications. In the long run, having a higher credit score will save you money in interest payments for things like mortgages and vehicle loans even if you pay off your credit cards every month. Who wouldn't want to knock off $100 of their monthly mortgage payment? Over a thirty-year mortgage, that would be $36,000 in savings.
They aren't going to buy or start a mobile network either.
Apple has never claimed that the Apple Card didn't have an issuing bank. Goldman Sachs USA, NA was buried in the fine print in the original announcement, I spend a few minutes tracking down the service agreement because that's where all the important details are.
Apple couldn't claim there was no issuing bank, that would have been fraudulent and deceptive. That would also invite a huge amount of liability and potential future legal action. They just said "visit this URL to learn more" and the fine print was lurking somewhere in a hyperlink.
As is so typical of any consumer finance discussion on the Internet these days, this thread is full of inaccuracies and incorrect assumptions by many participants.
It's worth pointing out that Apple has repeatedly stated that they are not an issuing bank and thus Apple Pay should not be subject to the same scrutiny as consumer financial institutions and payment networks. Even Apple Cash is operated by Green Bank NA.
https://companiesmarketcap.com/banks/largest-banks-by-market-cap/
They'd likely prefer a US company like Capital One ($42b). It's a profitable company and pays for itself:
https://www.macrotrends.net/stocks/charts/COF/capital-one-financial/net-income
All banks come with significant risk though so it should be run independently from Apple and a partnership would be easier/faster. They could always buy a controlling interest in a bank to gain leverage.
The most useful payment system to have is a wallet like Paypal/Venmo etc rather than a loan/credit system.
https://www.apple.com/apple-cash/
Having Apple Cash internationally as an alternative to a bank balance would be a good option for a lot of people and very low risk. If they are going to have a credit system, they need to start slowly and make sure they have profitable customers.
Apple had plenty of time, cash, and motivation to develop their own silicon for Macs. Some people predicted it -- or at least yearned for it -- for years. Many said it wouldn't happen because it's just sooo hard, or if they were going to do it they would have already done it, or that they don't have the scale to do it profitably, etc etc. And now, guess what, they did it.
ApplePay and AppleCard are very clear indicators that Apple is interested in participating in the market for financial services. Funny how so many people can't see what's right tin front of them.