Monday, May 14, 2018
If all goes according to plan, Apple Inc. and The Goldman Sachs Group Inc. will release a co-branded credit card and in-store loan offering for Apple customers early in 2019. While neither company agreed to comment, The Wall Journal was informed both parties are in discussions regarding the joint offering and terms and conditions of a potential partnership.
For Apple, the partnership would extend its foray into finance through Apple Pay. A joint credit card bearing the Apple Pay brand, provided an agreement is reached, is expected to replace the rewards-card and no-interest financing arrangement Apple forged with Barclays Plc. in 2005.
For Goldman Sachs, the move further diversifies its securities' business as the company moves into consumer banking and financing through its Marcus unit. The firm launched Marcus in 2016, tapping former Discover Financial Services executive Harit Talwar to lead the unit. Marcus offers no-fee, fixed rate personal loans; high-yield online savings accounts; and certificates of deposit.
"Assuming the reported facts are correct, Marcus has officially entered the co-branded card game," said Eric Marks, Senior Director in West Monroe Partners' Financial Services practice. "They have hired experienced talent and been in the market, but this is a major splash that stakes their claim as a co-brand issuer."
The collaborative partnership would add another significant card issuer to the mix to directly compete with existing brands. "If they can deliver on this program – and there is no reason to think they cannot – it will establish Marcus as a significant competitive threat to the established consumer card issuers," Marks noted.
Before Apple Pay launched in 2014, many in the industry were concerned Apple might maneuver outside the existing payment system rails by leveraging proprietary systems that would effectively lock out mainstream players. But Apple proved to be a team player. If reports prove accurate, Apple will once again work within the existing payments ecosystem in the anticipated Goldman Sachs partnership.
"For years, there was speculation that they (and other large tech/merchants) might try to create a payments play that was competitive to banks and payment networks," Marks said. "But when Apple Pay was rolled out, some were surprised to see that it worked with established industry players. Now that Apple is creating the next generation of their co-brand card program, they are once again working with industry partners."
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