When Mercator Advisory Group first looked at the potential of Goldman Sachs (GS) extending their reach into consumer credit cards in May 2018, we viewed it as more promising than Marcus, their retail loan venture. Things are beginning to form as Bloomberg reports Goldman’s CEO, David Solomon will be in Cupertino, CA later in March for Apple’s pre-launch.
In a project code-named “Project Cookie” the meeting will include some GS Hitters:
- David Stark, who became a Goldman Sachs partner last year, is overseeing it, the person said.
- The firm has dozens of people working on the deal, while the Apple side is being managed by the Apple Pay group, people familiar with the matter said.
- The co-branded cards may help both companies entrench themselves in the rapidly changing financial ecosystem used by both consumers and retailers. Goldman Sachs, long known for catering to big investors, corporations and the wealthy, is trying to broaden that customer base.
- The push includes a new unit, called Marcus, which offers deposit accounts and loans online.
It is no secret that the new plastic will be branded as a Mastercard, but the revenue dynamics are somewhat cloudy, according to the WSJ. Apple is known to be demanding, and certainly GS knows the value of a basis point.
- As iPhone sales cool, Apple is turning to fee-generating services. It has apps that stream music, curate news stories and make mobile payments, and is teaming up with Hollywood studios to produce original TV shows. The company aims to boost its services revenue to $50 billion by 2020.
- Apple currently takes a small cut when iPhone users make credit-card purchases through Apple Pay. It would get a bigger slice of the swipe fees from its own card, some of the people said
iPhone Canada mentions the points as one of the keys for the card, which will be interesting.
- users are expected about 2 percent in cash back on the majority of purchases, the report said, with possibly greater returns for purchases of Apple products.
Credit card points are not novel to GS’ crosstown and uptown rivals who each have 40 and 50 years of experience. Whether the Apple brand adds enough to disrupt the workings of Amex, Citi, and Chase remains to be seen. Consumers are fickle, but they did not flock to Apple Pay as many analysts expected.
GS/Apple credit card is one to watch but don’t expect it to take over the world without an issuer fight. But at least for now, NY issuers should protect their staffs from being raided by Goldman Sachs who will need credit risk talent and people who know how to market.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group