Skip to main content
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

Apple and Goldman Sachs Start Issuing Apple Cards to Consumers

The technology giant and the financial services company are jointly issuing the Apple Card, with expectations to hit $1.4 billion of high-margin revenue by 2023.
Apple Store on 5th Avenue in New York | Source: Apple
By
  • Reuters

NEW YORK, United States — Apple Inc and Goldman Sachs Group Inc rolled out a virtual credit card on Tuesday, which will help the iPhone maker diversify from device sales and also build out the Wall Street bank's new consumer business.

With the card, Apple aims to draw in iPhone owners with 2 percent cash back on purchases with the Apple Pay service, no fees and an app to manage related finances.

For Goldman, the card will enhance the bank's focus on its Marcus consumer banking brand, which it started in 2015 to even out volatile results from businesses such as trading and investment banking.

Apple shares were up about 1 percent at $195.30 in trading before the bell.

ADVERTISEMENT

The company said a limited number of the people who had expressed interest in Apple Card would start receiving sign-up invitations on Tuesday.

"The Apple Card doesn't play in the same league as premium rewards credit cards like the Chase Sapphire Reserve or AmEx Platinum," said Sara Rathner, an expert on credit cards at NerdWallet.

"Those cards charge ultra-high fees, but in return you get some pretty sweet perks: massive sign-up bonuses, annual statement credits, free Global Entry, and a higher point-earning rate for travel expenses."

Apple will offer an option for a physical card made of titanium, but with no visible number. Instead, the card's number is stored on a secure chip inside the iPhone, which will generate virtual numbers for online or over-the-phone purchases that require a number.

Apple said purchase information would be stored on the user's iPhone and that it cannot see the data. Goldman will not be allowed to use data for marketing purposes, even for selling its other products.

Gene Munster, managing partner with Loup Ventures and a longtime Apple watcher, said the card's adoption is likely to be low in the first year, but it could generate about $1.4 billion of high-margin revenue by 2023.

That would add about 1.8 percent to Apple's overall earnings and complement the much larger Apple Pay business for total payments revenue of $5.38 billion by 2023. Apple has roughly 50 million U.S. Apple Pay users now.

But at Apple's size - $265.6 billion in sales for fiscal 2018 - the revenue matters less than the effect on keeping Apple customers tied to its brand, said Ben Bajarin, an analyst at Creative Strategies.

ADVERTISEMENT

"If it works, it's one more thing that causes you to stay deeply loyal and entrenched in the Apple ecosystem, even if something better comes along," he said.

By Stephen Nellis and Akanksha Rana; editors: Greg Mitchell, Peter Henderson, Sandra Maler and Saumyadeb Chakrabarty.

© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from Financial Markets
A financial lens on the fast-changing fashion sector, including markets, investors and deals.

The Best of BoF 2023: Diversity’s Litmus Test

In 2020, like many companies, the $50 billion yoga apparel brand created a new department to improve internal diversity and inclusion, and to create a more equitable playing field for minorities. In interviews with BoF, 14 current and former employees said things only got worse.


The Year Ahead: The Future of Fashion Deal-Making

For fashion’s private market investors, deal-making may provide less-than-ideal returns and raise questions about the long-term value creation opportunities across parts of the fashion industry, reports The State of Fashion 2024.


The Investment Giant Behind Some of Fashion’s Biggest Deals

L Catterton, the private-equity firm with close ties to LVMH and Bernard Arnault that’s preparing to take Birkenstock public, has become an investment giant in the consumer-goods space, with stakes in companies selling everything from fashion to pet food to tacos.


view more

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
CONNECT WITH US ON
The Business of Beauty Global Forum
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
The Business of Beauty Global Forum