mayfly

eightzero said:

vtvita said:

eightzero said:

mayfly said:

eightzero said:

OK, I really don't get this. How does GS lose money on a credit card? Are they paying Apple a disproportionate amount of their rake from the cardholders? The article says "credit losses" so somehow more Apple Card holders are welching? 

Or...it is possible GS thinks they just aren't making the billion they planned? Not sure that's a "loss."

Nope. They're losing plenty. Their customer acquisition cost is $350 per account. In addition, the Apple Card attracts a much more affluent demographic who pay their balances every month, depriving GS of interest charges. On top of that, there is the "buy now, pay later" program that allows customers to pay over 4 months without interest charges. That's how they're losing money. I wouldn't cry for GS, though. They made $10.9 billion in the second QUARTER of this year, even with the Apple Card losses.

OK, so I understand: GS pays Apple $350 for each new account, and since those new accounts generally don't pay GS interest (affluent customers) GS can't make back the $350? And who gets the swipe fee from merchants (that I am always asked to reimburse the merchant for)? Is there no swipe fee charged to a merchant on the Apple Card? GS doesn't get a cut of each transaction?

I am sure GS has overhead on these operations. They have to pay staff to provide customer service; and other infrastructure like IT and the like. But a billion in losses to that? Really?

eightzero, you "understand" nothing. mayfly did not say "GS pays Apple $350 for each new account." Go back and start over.
BTW, this card from GS is the most miserable credit card experience I've ever had, for many reasons, which I've written about before. I've simply made it dormant, seldom—if ever—to be used again.

It is clear I understand nothing, hence the question mark at the end of the sentence. Go back and read again. I am very confused about what is being reported and how it happened. I'm not clear on that $350. Is it some sort of overhead estimate? Licensing to Apple? In any case, it seems like someone majorly blew this. A GS shareholder should be outraged...and this is clearly not of Apple's doing.

larrya said:

Mark of a great company: censorship and insecurity. 

eightzero said:

mayfly said:

eightzero said:

OK, I really don't get this. How does GS lose money on a credit card? Are they paying Apple a disproportionate amount of their rake from the cardholders? The article says "credit losses" so somehow more Apple Card holders are welching? 

Or...it is possible GS thinks they just aren't making the billion they planned? Not sure that's a "loss."

Nope. They're losing plenty. Their customer acquisition cost is $350 per account. In addition, the Apple Card attracts a much more affluent demographic who pay their balances every month, depriving GS of interest charges. On top of that, there is the "buy now, pay later" program that allows customers to pay over 4 months without interest charges. That's how they're losing money. I wouldn't cry for GS, though. They made $10.9 billion in the second QUARTER of this year, even with the Apple Card losses.

OK, so I understand: GS pays Apple $350 for each new account, and since those new accounts generally don't pay GS interest (affluent customers) GS can't make back the $350? And who gets the swipe fee from merchants (that I am always asked to reimburse the merchant for)? Is there no swipe fee charged to a merchant on the Apple Card? GS doesn't get a cut of each transaction?

I am sure GS has overhead on these operations. They have to pay staff to provide customer service; and other infrastructure like IT and the like. But a billion in losses to that? Really?

eightzero said:

OK, I really don't get this. How does GS lose money on a credit card? Are they paying Apple a disproportionate amount of their rake from the cardholders? The article says "credit losses" so somehow more Apple Card holders are welching? 

Or...it is possible GS thinks they just aren't making the billion they planned? Not sure that's a "loss."

FileMakerFeller said:

mayfly said:

Why on earth would anyone see getting a larger share of a collapsing market as good news?

Because it beats getting a smaller share of a collapsing market?

mayfly said:

That's what happened to the companies making buggy whips a hundred years ago. As more and more companies went bankrupt, the ones remaining got a larger and larger share of the remaining market. You can draw your own conclusions about how much money they make today versus when they had a smaller share of a larger market!

Collapses don't happen overnight. We've had iPhones for more than 15 years at this point, and (while it is shrinking) the PC market remains large enough to support multiple vendors that are (combined) selling in excess of 100 million units per year. There remain multiple use cases where a desktop or laptop machine is better than a smartphone or tablet, unlike your example where the motor vehicle was better at everything than the horse-drawn buggy. And, really, the buggy whip manufacturers were making an accessory to a dominant device; the buggy makers had the option of transitioning to on-device horsepower and those that did it well survived.

There is also a comparison to be made to the floppy disk industry: it can be profitable to serve even a dying niche, but the safe bet is to diversify before the end becomes apparent.