Apple and Goldman Sachs are reportedly planning to issue a cobrand credit card later this year that will come with associated iPhone and money management features, following initial tests with employees in the coming weeks, according to The Wall Street Journal, which cited people familiar with the matter.
The card — which was initially reported on last year — will feature tools connected to the Apple Wallet, like the ability to set spending goals, track rewards, manage balances, and receive notifications on spending, which are reportedly being developed by Apple engineers. And the credit card, which will run on Mastercard’s network, is going to offer up to 2% cash back on most purchases.
The credit card could allow both firms to lean on each other’s expertise to enter further into the payments space with a unique product.
- The card could escalate Goldman Sachs’ push into retail- and consumer-oriented products. Goldman has been enhancing GS Bank, its consumer banking business, through several initiatives: In 2016, it acquired GE Capital and launched Marcus, its digital-only offering that provides personal loans and an online savings account, which recently reached $35 billion in deposits. Further, Goldman Sachs acquired credit card startup Final and recently acquired Clarity Money, a personal finance management (PFM) app, both indicating a deeper interest in the credit card and personal finance space. Partnering with Apple could be an effective way for Goldman to streamline its push to reach consumers on a large scale — particularly if the card offers cash back, which is a top motivator for consumers to make a card their primary card. And the card — which would mark Goldman Sachs’ first credit card — could accelerate the firm’s goals to generate $1 billion in annual revenue by 2020 through its new consumer banking business.
- For Apple, partnering with an established financial institution could cultivate consumer trust in its other payment offerings. Apple plans to boost revenue from its services segment to $50 billion by 2020, and this credit card can help ensure that goal: Apple currently takes a fee when customers use credit cards through Apple Pay, but swipe fees through a credit card would be more lucrative for the firm. Further, Apple executives hope that the card will boost Apple Pay usage, per The WSJ. Though the card isn’t directly tied to mobile payments, it could help spotlight Apple Pay and encourage adoption — Apple Pay surpassed 1.8 billion transactions in Apple’s fiscal Q1 2019 (ended December 29, 2018) — as only an estimated 14% of US consumers use mobile wallets, suggesting its user base is small. That’s especially true if the firms add a direct Apple Pay integration or incentive tied to the card. And as Apple expands its presence in the payments space, that could ultimately increase interest, trust, and awareness of Apple Pay.