SAN FRANCISCO/BANGALORE – Apple Inc. and Goldman Sachs Group Inc. rolled out a virtual credit card on Tuesday, which will help the iPhone-maker diversify from device sales and also build out the Wall Street bank’s new consumer business.
With the card, Apple aims to draw in iPhone owners with 2 percent cash back on purchases with the Apple Pay service, no fees and an app to manage related finances.
For Goldman, the card will enhance the bank’s focus on its Marcus consumer banking brand, which it started in 2015 to even out volatile results from businesses such as trading and investment banking.
There is no schedule set for the launch of Apple Card in Japan.
The company said a limited number of the people who had expressed interest in Apple Card would start receiving sign-up invitations on Tuesday.
“The Apple Card doesn’t play in the same league as premium rewards credit cards like the Chase Sapphire Reserve or AmEx Platinum,” said Sara Rathner, an expert on credit cards at NerdWallet.
“Those cards charge ultra-high fees, but in return you get some pretty sweet perks: massive sign-up bonuses, annual statement credits, free Global Entry and a higher point-earning rate for travel expenses.”
Apple will offer an option for a physical card made of titanium, but with no visible number. Instead, the card’s number is stored on a secure chip inside the iPhone, which will generate virtual numbers for online or over-the-phone purchases that require a number.
Apple said purchase information would be stored on the user’s iPhone and that it cannot see the data. Goldman will not be allowed to use data for marketing purposes, even for selling its other products.
Gene Munster, managing partner with Loup Ventures and a longtime Apple watcher, said the card’s adoption is likely to be low in the first year, but it could generate about $1.4 billion (¥148.3 billion) of high-margin revenue by 2023.
That would add about 1.8 percent to Apple’s overall earnings and complement the much larger Apple Pay business for total payments revenue of $5.38 billion by 2023. Apple currently has roughly 50 million U.S. Apple Pay users.
But at Apple’s size — $265.6 billion in sales for fiscal 2018 — the revenue matters less than the effect of keeping Apple customers tied to its brand, said Ben Bajarin, an analyst at Creative Strategies.
“If it works, it’s one more thing that causes you to stay deeply loyal and entrenched in the Apple ecosystem, even if something better comes along,” he said.
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