The Cupertino, California-based company teamed up with Goldman Sachs as its issuing bank for the card and Mastercard for payment processing. But after Monday’s announcement, Goldman’s own analysts were underwhelmed.
“An Apple Card credit card offer was announced for summer availability with attractive spending tracking features but our calculations again imply little short term earnings impact for Apple,” Goldman Sachs senior equity analyst Rod Hall and others wrote in a note after the event.
For Goldman, the partnership builds upon an effort to expand into the consumer lending space after spending the bulk of its 150-year history serving large corporations and the ultra-rich.
It’s the first credit card client for the investment bank, which likely provided Apple the flexibility to build a product it wanted without fear of angering other partners – as would be the case with large lenders like JPMorgan Chase.
Apple’s new card will provide users 2 percent daily cash back on purchases made via “Apple Pay,” the company’s payment platform on the iPhone. Those who use the physical card will only receive 1 percent cash back, while customers who purchase Apple products will receive 3 percent.
Hall expects a “large percentage of transactions to be done at the [1 percent] level.”
“We would expect the typical consumer to perceive the cash return rate to be OK but not great,” the note reads.
Overall, Goldman Sachs expects the card to generate $882 million in annual revenue.