In 2019, the Apple Card was launched with the aim to deliver higher control, transparency, and privacy standards to its consumers. Similar to Revolut, Apple Card has no fees, daily cash back, and seamless integration in Apple’s mobile devices. Moreover, its main differentiation point is a new level of privacy, security and transparency to credit cards, allowing consumers to quickly and easily analyze their spending patterns and calculate how much they could save in interest charges by paying off different portions of their balances. Goldman Sachs is the official issuer of the card and is responsible for underwriting, customer service, the underlying platform, and regulatory compliance. The slogan for Apple Card is “created by Apple, not a bank”. Nevertheless, this can be misleading as Goldman Sachs decides who gets credits, bears the risk of lending, and collects unpaid debts. Thus, when a recession hits and default rates rise, the Apple Card’s marketing could make it difficult for the bank to chase down debtors, given the potential damage to Apple’s brand and reputation for customer service. At Apple’s request, Goldman also removed late fees and agreed to not sell customer data. It also adopted the tech giant’s signature font for cardholders’ monthly statements.
Having set privacy as top priority of this product, the biggest concern arising from this partnership is the data handling process and its privacy policies. Apple is updating its privacy policy for Apple Card to enable sharing more anonymized data with Goldman Sachs. In the App, when signing in, there is a clear “opt-in / opt-out option”. Choosing the opt-in option, the data sharing is enabled. On the one hand, Goldman Sachs will receive all personal information that Apple owns on that customer. Apple believes that in this way Goldman Sachs will be able to offer credit to people who may be automatically be rejected under the “old way of doing things”. On the other hand, Apple will also get data regarding internal transactions. The data is always aggregate and anonymized. Otherwise, the customer can choose the opt-out and no data will be shared among the two partners.
The amount of data Goldman Sachs will be able to have before making a credit decision will be enormous and can play against or in favor of the customer. Nevertheless, an average co-branded card offer (e.g.: airline card or retailer card) is controlled entirely by the financial services side of the partnership (basically the credit card companies decide what data they get and how). Apple Card, if respects its promises, with the new arrangement outlined in the privacy policy does not share any data point with the opt-out option. There is almost no financial product that offers this option, especially credit cards. I worked in a bank and I can confirm that most cards take all of the above information and much more in their approval process.
Will Apple Card respect its promise?
https://www.goldmansachs.com/our-firm/history/moments/2019-apple-card.html
https://markets.businessinsider.com/news/stocks/goldman-sachs-assigns-apple-card-credit-limits-collects-debts-2020-1-1028823960
Hey Beatrice, thank you for your interesting post! I personally believe that the age of misleading customers without reputational damage is over. If more and more people find out that Apple‘s credit card is in fact just a branded card of Goldman Sachs, major trust will be broken. Consequently, Apple is under high pressure to not share any data after the opt-out decision – if hackers or NGOs can prove otherwise, the story of Apple‘s credit card will be history before it really began.