Goldman and Apple Credit Cards: Not the Next Big Thing

by Brian Riley 0


Goldman Sachs’ anticipated partnership with Apple is not worth the frenzy.  While it is interesting that Goldman Sachs will be issuing credit cards, joining with Apple is a lackluster play.  Sure, the deal grabs headlines ranging from the WSJ to the Washington Post.  However, Apple’s existing program with Barclays is not much more than a typical retail co-brand.  This is not similar to Citi winning the Costco co-brand from American Express.  The Apple co-brand is a small deal.

Given Goldman’s recent (anticipated) entry into payments and Barclay’s long-term association with credit cards, you have to wonder if someone got snookered with promises of significant volumes, millennials, and never-ending throughput.

  • Goldman Sachs and Apple are looking to partner together to create a new credit card, the first foray by Goldman Sachs into the $1 trillion credit card market, The Wall Street Journal reported Thursday, citing unnamed sources.
  • Goldman has been incrementally pushing into consumer banking products. It does personal loans and savings accounts under the brand Marcus, and has been looking at other consumer products.
  • Apple is a huge and iconic brand, and it would be a symbolic success for Goldman as it enters the consumer credit card market, industry experts said, But it is not a significant co-brand partnership like American Express’ partnership with Delta Air Lines, Citigroup’s partnerships with Costco and American Airlines or JPMorgan Chase’s partnerships with Marriott and United.

Apple Pay brought media attention, significant bank licensing fees, and new technologies to payments, but it is unlikely that you will find any industry veteran that would call Apple Pay a successful rollout.  Looking for big deals in the card business, check out Chase’s Sapphire Reserve or Amex’ Platinum Card.  Those cards attract millions.  Want co-brands? Try Costco/Citi, Delta/Amex, Talbots/Alliance Data or Pottery Barn/Synchrony.  Apple has proven that it does not like to share, dating back to its closed technology, and up through their costly licensing model.

That’s why we were quoted in the recent story.

  • It’s not going to put them on the map when it comes to market share, but it is definitely a strong customer base you want to have,” said Brian Riley with Mercator Advisory Group, which specializes in consulting with companies looking to do co-brand credit cards.

Goldman Sachs will have a credit card and it will be competitive.  While we are under-impressed with the partner choice, they will have plenty of time to build a retail credit card play.  For now,  their job postings are for technology roles.  It looks like it is time for Goldman to look uptown to Chase and Citi, and downtown to Amex for some seasoned New York operations and strategy types before their next deal.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

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