[HN Gopher] Goldman Is Looking for a Way Out of Its Partnership ...
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Goldman Is Looking for a Way Out of Its Partnership with Apple
Author : ExMachina73
Score : 70 points
Date : 2023-06-30 20:34 UTC (2 hours ago)
(HTM) web link (www.wsj.com)
(TXT) w3m dump (www.wsj.com)
| ineedasername wrote:
| A question: Credit cards are generally profitable for banks,
| interest rates set accordingly to account for high default risk
| for these types of unsecured loans.
|
| So what is it about these particular cards (really the audience
| using them) that makes them disproportionately more risky/prone
| to default?
| itissid wrote:
| Does apple's foray into being a financial institution that can
| lend not already undercut the Goldman venture by being a
| lender(Apple Financial LLC ) and owning the PoS for the
| transaction via the iPhone? In other words why did goldman not
| sue apple(or think it should have put that in the contract)?
|
| 1. I thought their Apple Financial LLC is now a lender that gets
| to keep all the interchange fees from transactions on its own
| Digital wallet. This means users don't have to keep a 3rd party
| CC and Apple can lend to the Merchant.
|
| 2. Apple will then need to collect money from the users at the
| other end, which I thought was gonna be via their High Yield
| saving account: https://www.apple.com/newsroom/2023/04/apple-
| cards-new-high-...
|
| This should complete the loop...
| itissid wrote:
| And assuming I am right about apple owning the whole loop e2e.
| The play here is to replace Mastercard and Visa's monopoly, or
| in other words be what Square Payments was aspiring to be but
| hasn't gotten there, yeah?
| yardie wrote:
| I use an Apple Card and it's good but nothing amazing. The
| incentives and benefits are pretty basic. The interest rate isn't
| competitive, not even a 0% teaser rate. But I use it because it's
| super fucking convenient. 1 account for my entire family. It
| helps catch billing mistakes for example we were paying for 2
| Prime subscriptions for years; a monthly and annual.
|
| My impression is Apple is trying to be the universal app. Chat,
| App Store, media, and bank. And GS is there stepping stone.
| mshockwave wrote:
| that's my impression too. The reward is mediocre to say the
| least, but it's super convenient by optimizing the most common
| path: payment in a single click on the dashboard and real-time
| activity feed. And the killer feature: autofill on web pages
| with Safari.
| pazimzadeh wrote:
| yeah the best part is the instant push notifications when a
| transaction goes through
| a1o wrote:
| This isn't default for all US banks and cards?
| tgcordell wrote:
| I don't think this is unique to Apple as my Chase cards do
| this. I'm assuming most CCs do.
| tgcordell wrote:
| Getting your data out of their platform to do analysis on it
| use to be such a PIA. Have they resolved this yet?
| sergiomattei wrote:
| Workaround: an app like Mint that can export the transactions
| as CSV.
| grvdrm wrote:
| Indeed - Mint has mechanism for it. Don't think any others
| do but I believe CoPilot is working on it.
| BrittonR wrote:
| Copilot also lets you import Apple Card transactions as
| CSV
| havefunbesafe wrote:
| Nope, still a nightmare
| efitz wrote:
| No wall: https://archive.fo/sp4sl
| frankfrankfrank wrote:
| [dead]
| paxys wrote:
| It's bizarre how Goldman screwed up their push to consumer
| products so bad. How do you manage to lose _3 billion dollars_ in
| 3 years?
| missedthecue wrote:
| You lose a billion a year. Chump change, Uber has lost a
| billion a quarter for a decade.
| tough wrote:
| You loose 1 billion a year
| stinkyy wrote:
| [dead]
| jxf wrote:
| Q: The article doesn't say much on this point, but are there any
| hints about why Goldman was losing so much money on consumer
| lending at a time when other lenders seem to be doing
| comparatively better?
| gumby wrote:
| I think it's a combo of not having a culture for it and that
| the margins in that space are lower than that of their other
| lines of business.
|
| Apple is the master of entering new LOBs always with (only
| when) they can get the same margins they do on the rest of
| their business. Remember how people laughed at the price of the
| iphone? They didn't care -- the target was 1% of the phone
| business: the profitable part.
| ender341341 wrote:
| from previous readings, some of it's "we're counting potential
| future loses as current loses" but post pandemic lots of
| lenders are starting to feel some squeeze.
| DLA wrote:
| Apple could do the financing part themselves and partner with a
| card network for comms infrastructure.
| fnordpiglet wrote:
| Being a retail bank is not a simple undertaking. They would not
| want the complexity and regulatory distraction partnering with
| a bank is a smarter move.
| [deleted]
| nortlov wrote:
| https://archive.ph/sp4sl
| [deleted]
| sturob wrote:
| "In January, Goldman disclosed that it had lost about $3 billion
| on the consumer-lending push since 2020."
|
| Looks like Tim Cook will be joining Warren Buffett in the
| 'squeezing Goldman Sachs' hall of fame:
| https://markets.businessinsider.com/news/stocks/warren-buffe...
| kirkbackus wrote:
| In the attached article
|
| > After hovering around record lows for much of the pandemic,
| consumer delinquencies are rising across the industry.
|
| > It lost slightly more than $1 billion in 2021 and $783
| million in 2020, after accounting for operating expenses and
| money set aside to cover possible losses on loans
|
| That seems like an enormous amount of money to support buy now
| and pay later
| tempest_ wrote:
| The retailers love it though.
|
| I even Amazon is getting in on it.
| frankfrankfrank wrote:
| [dead]
| dylan604 wrote:
| Apple has enough cash reserves to be able to be a bank
| themselves, but I guess are much too smart to use their own
| money.
|
| Is the buy now, pay later all of what this stems from? I have
| never looked into it, but I assumed they were also backing
| the Apple credit card which I consider totally different from
| each other.
| ayende wrote:
| It's more than that. Consider Apple's strongest advantage,
| it's brand.
|
| If Goldman is the one handling the lending, it is also the
| one sending you to collections.
|
| The PR damage to Apple's brand can be significant
| dylan604 wrote:
| But Apple could take it to an 11 too. If they finance
| your equipment and you fall behind on your payments,
| guess whose equipment just went into lock-out mode...
| Apple could then allow the device to be returned to an
| Apple Store, and credit will be applied to the account. A
| voluntary return policy, only throw in a carrot of if you
| provide a memory stick, they'll make you a copy of the
| data for a small nominal fee.
| NicoJuicy wrote:
| That will most definitely destroy the brand
| dylan604 wrote:
| Ford, Chevy, Toyota, Honda, et al. repo cars daily, and
| their brands are not hurting. People know when they can't
| make payments that their collateral is likely to be
| collected.
|
| I'm not saying I'm for them doing this or anything, but
| just taking the dystopian concept to a logical
| completion. We've already seen where self driving cars
| have been discussed repossessing themselves, so this is
| just the natural extension of the same concept. This
| forum tends to think that places like FB, Googs, etc
| should have a very negative brand due to the data
| collections, but the masses don't give a damn.
| fnordpiglet wrote:
| Goldman considers its brand a key asset.
|
| """Our assets are our people, capital and reputation. If
| any of these is ever diminished, the last is the most
| difficult to restore. """
|
| https://www.goldmansachs.com/our_firm/investor_relations/
| fin...
|
| It's the truth.
|
| The retail bank was a mess. It's a stepping stone for
| Solomon to disrupt the trading culture and take control
| of the bank from the investment bank. It costs a lot to
| set up a retail bank, and the political will was there to
| start but not to finish. The politics around the retail
| bank was hyper toxic, with a classic us and them
| mentality. The established tech and back office were
| marginalized and the retail bank tried to build it all
| themselves but learned the hard way very late those
| groups exist for a reason - regulatory and security bars
| are super high and can't be achieved by hubris alone.
| Apple had extremely aggressive asks of the technical
| stack, they outsourced a lot of core stuff to SaaS
| finserv at a high margin, and a bunch of other issues.
| Finally the timing of it all was awful. They started in a
| super low rates cash flush world and things have gotten
| harder everywhere for them.
|
| Source: I was there
| tedunangst wrote:
| Wait to see what the realized losses are. Banks are kinda
| infamous for huge preemptive write downs, then discovering
| "profits" when the loans pan out.
| formercoder wrote:
| I think it is that, I assume "money set aside to cover
| possible losses on loans" means income statement provision
| for future losses.
| formercoder wrote:
| What's really shocking is that this number is post provision
| for future losses, which is a non cash accounting charge that
| the media often uses to make banks look worse. These are real
| losses.
| a2tech wrote:
| I wonder how the savings kickback feature would work under Amex--
| I don't think they have any partnerships like that
| anuragsoni wrote:
| > savings kickback
|
| Are you talking about cash back? If so Amex does offer cards
| that support cash backs (I've had one for quite a few years).
| If you are talking about savings accounts, Amex also offers a
| High Yield Savings account whose rates are very competitive
| with other banks in the US.
| a2tech wrote:
| Yes, the cash back into a high yield savings account. My wife
| has it and it's a great setup
| no1groyp wrote:
| [dead]
| gumby wrote:
| Ha ha good luck, suckers. Negotiating with Apple is a fool's
| effort: they have too much experience and are too good at it.
|
| Amex are no dummies either (despite a couple of near death
| experiences over the years). They'd be a good match with Apple
| from a consumer perspective but I find it hard to imagine that
| Apple would give up the terms of the sweet deal they struck with
| Goldman nor can I believe Amex would be willing to accept those
| terms.
|
| Goldman isn't going to go out of business due to their botched
| consumer foray, but I'm sure Apple would be quite content to
| continue to peacefully pump blood out of Goldman until the
| original agreement runs out.
|
| And Goldman: next time don't recruit a DJ to be your part time
| CEO!
| carabiner wrote:
| This is extraordinary because Goldman Sachs has been
| negotiating contracts for 150 years, from companies to
| governments. You can't expect them to win every bet, but it's a
| striking example that a tech company might have better
| financiers than a financial one.
| gumby wrote:
| Apple, headed by a supply chain guy, famously has a single
| balance sheet and pl, not divisions. They are not afraid of
| walking away from a deal that doesn't meet their criteria,
| and they are past master at squeezing their suppliers.
|
| Goldman is a sprawling group of interests, far more
| transactional, and though it's no longer a partnership,
| doesn't speak with one voice like apple does.
|
| I don't like Goldman, and while I use apple gear I don't want
| to do business with them beyond making purchases.
| Simulacra wrote:
| Was I the only person to get the Apple card and then cancel it
| because I wanted to have the titanium card?
| petercammeraat wrote:
| Partnership with American Express could lead to Apple Card being
| available in more countries.
| [deleted]
| lemax wrote:
| Shrewd shopkeepers know the AMEX deal - higher transaction
| fees, potential chargebacks, etc. Even when they do accept it,
| I feel bad giving my AMEX to a small business, especially when
| I'm abroad. Accepting AMEX is common at a high-end restaurant
| or hotel around the world, but good luck once you're off the
| beaten track...
| mshockwave wrote:
| I thought it's the opposite: MasterCard has much wider global
| coverage compared to American Express.
| troupo wrote:
| American Express is often not accepted even in countries where
| it's supposed to be present (e.g. quite a few shops in Sweden
| don't accept AmEx).
|
| Visa and MasterCard are much more universally accepted.
| grepfru_it wrote:
| Real talk, shops will not continue to reject AmEx when they
| realize Amex is bringing the size and scope of the APPLE
| consumer market
| mikestew wrote:
| If you want the Apple consumer market, you support Apple
| Pay and then the cards you support don't matter.
|
| Make me paw my credit card out of my wallet like an animal,
| be it an AMEX or Apple Car, and I find somewhere else to
| shop.
| krustyburger wrote:
| You must have a very dim view of people who prefer cash
| or don't have a smart phone. All the pawing they do like
| animals...
|
| This is among the most classist comment I've ever seen on
| HN. The funny thing is you seem to think your phone or
| your smartwatch set you apart from those pawing animals.
| Say nothing of the 1%, you're seemingly proud to be in
| the 60%.
| troupo wrote:
| That consumer market is already available to them via Apple
| Pay, and people paying with their Visas and MasterCards.
|
| Apple Card is non-existent outside the US.
| EdwardDiego wrote:
| In my country they will, just because of the far higher
| merchant fees Amex charges compared to Visa and Mastercard.
| tedunangst wrote:
| How many Amex holders don't have a second card? I've never
| heard of anybody getting to the checkout line, then saying
| oh drat, they only take visa, and walking out.
| Sylamore wrote:
| For 16 or so years Costco required you to have an AmexEx
| card if you weren't paying with cash or debit, now they
| only take Visa. This was apparently something lots of
| newish members weren't aware of so it wasn't too uncommon
| to be in line and have someone say they didn't have the
| right card to pay. You'd then have to wait for the
| checkout person to give them the Costco Amex card spiel.
| gumby wrote:
| OTOH I typically only have 2-3 non-Amex charges a month.
| Costco is the main one (used to be Amex only too).
| tedunangst wrote:
| I'm sure lots of people use their Amex preferentially,
| but I've never seen anyone put their hand on a door
| handle, then see that only visa/mc stickers are in the
| window, and walk away.
| JumpCrisscross wrote:
| I have. When someone wanted to expense something. Or when
| they didn't want to bother with the Chase card declining
| because it forgot they were still overseas or whatnot.
| likpok wrote:
| Maybe. I think Amex is still the leading corporate card --
| hard to find a less price sensitive bunch than people
| spending someone else's money. That was part of why Amex
| was accepted in many places: high potential for big orders.
|
| If my Apple Card switched to Amex I might switch the
| default tap to pay card to something else. Right now it's
| very convenient for everywhere that takes tap-to-pay,
| but... who wants to deal with it sometimes not working?
| notyourwork wrote:
| It's basically zero effort to use a different card.
| cheschire wrote:
| I think GP's point was that with AMEX not being accepted
| everywhere, it would no longer be a transparent action to
| pay with tap. Now they would have to either deal with the
| rejection and change to a non-default card, or they would
| need to prepare in advance by looking around for what
| kinds of cards are accepted. Neither of these things are
| a big deal, but it's friction, and consumers don't like
| friction.
| likpok wrote:
| Yeah I mean if it happens once or twice I'm gonna switch
| to a different default card. The .5% extra cash back
| isn't that much, especially for something that's all
| about convenience.
|
| Mostly the Apple Card was a novelty for me: 100% of my
| usages is via Apple Pay.
| Hamuko wrote:
| Apple devices aren't nearly as universal outside of the US
| (except Japan where they're even more universal) and there
| are already payment options for non-US Apple users. I think
| I have four different payment cards in my Wallet.
| no1groyp wrote:
| [dead]
| vsnf wrote:
| And ironically, less available in America.
| tommoor wrote:
| Do you have an AMEX? It's accepted basically nowhere outside of
| the US, actually very annoying
| zh3 wrote:
| UK experience (some years back) of a platinum card was that
| the few places who accepted it preferred Visa or Mastercard.
| Minimal utility, basically.
| [deleted]
| Zizizizz wrote:
| Anecdotally, I can use it in 75% of shops I frequent.
| dvt wrote:
| Total nonsense. I was traveling for 3-4 months last year, and
| my AMEX was accepted almost everywhere in Spain, Portugal,
| Germany, etc.
| voter101 wrote:
| In Germany being able to pay with a card is not a standard.
| And from that subgroup of places accepting cards, a big
| number of them will accept only Giro (German card
| standard). Visa/MC is far from being universally accepted
| and AMEX is even rarer.
|
| That changes of course, but mostly in big cities' centers
| (Covid accelerated things in Berlin). I hope businesses
| catch up with the new wave of payment terminals like
| iZettle and SumUp - they support all these different cards
| without a problem
| atkbrah wrote:
| Where I'm from AMEX is basically used for free stuff and
| cancelled afterwards. And for curiosity like reservations for
| me and my fisherman's friends.
| mcculley wrote:
| In the last six months, I have used my AmEx in Italy, Canada,
| and The Bahamas.
|
| Where are you having trouble with AmEx?
| fakedang wrote:
| India, Malaysia, France, Switzerland and Germany. Go to
| small towns in most of Europe and you'll find a significant
| number of vendors not accepting Amex.
| mcculley wrote:
| I know it is not accepted in many smaller places. I was
| reading maybe too literally the nonsense assertion,
| "accepted basically nowhere outside of the US."
| nottorp wrote:
| Back when you needed to swipe that magnetic stripe the
| Amex one was different and required a special reader that
| almost no one in europe had. Except maybe tourist traps.
|
| Not sure how it works now if Amex has discovered chips
| and contactless. The payment processors probably still
| need a separate path for Amex and I haven't seen that
| logo in a lot of places that do display visa and mc. So
| maybe it's still only available in tourist traps.
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