Goldman’s Apple Card: What Will Q2 Hold?

Apple Card — the iPhone-based credit product launched last summer by Goldman Sachs, Apple and Mastercard — is expected to be a hot topic on Goldman’s earnings call Wednesday (July 15).

A look at recent activity around the card shows a good deal of innovation and a fair amount of concern over rejection rates for both the card and its mobile wallet cousin, Apple Pay.

On the innovation side, installment payments provider Afterpay announced that it will enable its point-of-sale (POS) alt credit solution via Apple Pay in the U.S. To use Apple Pay, customers tap the card icon in the Afterpay app, which then activates the Afterpay card in the Apple wallet.

“As we enter the second half of the year and retail re-emerges across the world, it’s critical we help our partners drive business growth both online and offline,” Nick Molnar, co-founder and U.S. CEO at Afterpay, said in a statement. “As a proven solution for driving incremental sales and new customer growth, we are thrilled to introduce our new omnichannel solution to U.S. retailers as they begin to open their doors and bring shoppers back to their physical stores.”

Also on the innovation side, earlier this month Apple introduced a web portal for managing the Apple Card, which includes a bill pay feature as well as online statements. The aim of the portal is to allow users to get away from the limitation of seeing all relevant card information on an iPhone. However, because the portal sits on Apple’s site, a consumer would still need to be an Apple customer to get an Apple Card.

The team of Goldman and Apple is also trying to innovate its way out of what is apparently a customer relationship issue with rejections.

While Apple Pay is automatic for Apple customers, Apple Card acceptance is still beholden to credit ratings and credit history. As the supporting bank, Goldman is liable for bad debt, which is now a more pressing issue with the pandemic and its effect on card holder’s ability to commit to their monthly payments. To address the issue, the new program, called Path to Apple Card, is similar to credit counseling.

According to several Apple insider sources, Apple Card applicants who were rejected will be invited to join Path to Apple Card. Consumers in the program will receive detailed information about the steps they can take to get approved at a later date. Says American Banker: “The program might provide specific advice, for example, on how much existing debt a rejected applicant needs to pay off. Or it might offer personalized information on past-due balances that need to be resolved. Participants will not receive specific credit scores that they need to reach.”

At a recent industry conference, Goldman Sachs Chairman and CEO David Solomon called the Apple Card the “fastest-growing credit card of all time.” But he admitted that the company’s relatively new consumer banking business has not won over the entire Goldman internal executive team.

“If you plopped this business off somewhere else, it would be quite valuable,” he said. “Inside Goldman Sachs, I think at the moment it’s a show-me.”

Solomon and other Goldman execs will most likely be asked about a new QR feature that has been rumored to be built into future iterations of Apple Pay. Apple insider site 9 to 5 Mac reported that references found in the still-in-development iOS 14 code show that Apple is working on letting users make payments with Apple Pay by scanning a QR code or traditional barcodes with the iPhone camera.

“We’ve managed to access this feature hidden in iOS 14 beta 2, and although it still doesn’t work, we can clearly see an image showing how it will work,” reported 9 to 5. “Users will point the iPhone camera at a QR code or traditional barcode to pay bills and other things with a card registered with Apple Pay.”