Apple joins forces with Wall Street investment bank to launch credit card

Apple Inc. CEO Tim Cook speaks Monday during the launch of the Apple Card at the Steve Jobs Theater at the tech giant’s campus in Cupertino, Calif.

Apple Inc. is joining forces with a Wall Street investment bank in a play to get a piece of the consumer credit-card market — but don’t expect the Apple Card for iPhones to necessarily disrupt the market.

The card, unveiled Monday along with the Cupertino, Calif., tech giant’s video-streaming service, is tied to Apple Pay, which lets people load banking information onto their iPhones and pay in store or use it for purchases online. It will work globally where Apple Pay is accepted, lets users track spending in the Wallet app and focuses on transaction privacy.

Apple will offer titanium credit cards with laser etching for places where Apple Pay isn’t accepted, but the physical Apple Card won’t have a card number, further encouraging the use of the card with Apple Pay. The card will have an annual percentage rate of 13.24% to 24.24%.

The card includes a cash-back rewards program, including 2% cash back on all Apple Pay purchases made with the card and 3% on purchases made at the Apple Store or with services such as the App Store. And it will exclude common charges such as annual and late fees.


The service is being offered in partnership with Goldman Sachs, which traditionally offered investment banking services but has recently made a move into consumer banking.

“As a newcomer to consumer financial services, Goldman was up for the challenge of doing something more bold and innovative,” said Jennifer Bailey, Apple’s vice president of Apple Pay.

Apple isn’t new to digital payments. Apple made a big splash with Apple Pay in 2014 when it struck partnerships with payment networks such as American Express and Visa. And it has long offered a credit card with Barclays for Apple hardware purchases.

Apple and Goldman are entering the intensely competitive field of consumer credit, where banks have been shelling out costly rewards to encourage consumers to spend through their cards. Banks, which collect a fee from merchants each time a consumer swipes their card, have been eager to grow their card businesses in recent years and have benefited from low default rates.


“This partnership is a major step in the growth of our consumer franchise, furthering our vision to create the leading digital consumer platform,” David Solomon, chief executive of Goldman Sachs, said in a memo to employees.

Apple Card users will receive their cash-back rewards on a daily basis instead of at the end of each billing cycle. But the Apple Card’s cashback structure is similar to those offered by Citigroup’s Double Cash card and PayPal Holdings Inc.’s Cashback Mastercard.

“Apple Card is unlikely to disrupt the U.S. credit card market since its core features are similar to those of numerous other cards offered by leaders such as Citi and Chase, which also provide a much wider range of benefits and reward-redemption options,” Bloomberg fintech analyst David Ritter said.

In a nod to privacy concerns, Apple and Goldman Sachs won’t share user data with partners and advertisers. Apple also won’t know what consumers bought, where they made purchases or how much a consumer spent with Apple Card, which will run on the Mastercard network, Bailey said.

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