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Sniping From Goldman Sachs Rivals on Apple Card

Hugh Son, writing for CNBC:

Within the industry, the deal is widely perceived as one that’s risky for a bank to take on. Citigroup was in advanced negotiations with Apple for the card but pulled out amid doubts that it could earn an acceptable profit on the partnership, according to people with knowledge of the talks. Other banks, including J.P. Morgan Chase, Barclays and Synchrony, also bid on the business. Apple and the banks declined to comment on this story.

It turns out that the Apple Card’s consumer-friendly features — no fees of any kind, software that actively encourages users to avoid debt or pay it down quickly, and potentially lower interest rates — make it harder for banks to make money on the product. Even features like the card’s calendar-based billing can impact a lender’s cost of funding and servicing, since customers’ borrowing will be concentrated at month-end, rather than spread out over weeks.

No shit they’re going to make less money than cards that charge fees and higher interest rates. But they’re going to make money — I’ll eat my hat if Goldman and Apple don’t turn a profit on this card. CNBC’s headline — “A Goldman Sachs rival pulled out of the Apple Card deal on fears it will be a money loser” — makes it sound like they’re going to lose money, which is ludicrous. They’ll make money on each transaction and they’ll make money charging interest on any cardholder who carries a balance. Arguing that they won’t make enough money is just usurious greed.

I don’t use the word lightly, but it’s evil to argue against the software Apple is releasing to help cardholders avoid debt and pay down what debt they owe quickly.

Also, this whole CNBC article seems like a way to sell consumers on getting an Apple Card.

Wednesday, 29 May 2019