Apple Pay / Goldman Sachs Poised to Team Up for Credit Cards

May 15, 2018         By: Steven Anderson

It’s easy to forget sometimes that most mobile payments systems either depend on or otherwise involve a credit card in some way. In fact, credit cards have been one of the biggest mobile payment systems since cash. With that in mind, the recent revelation of an Apple Pay credit card issued by Goldman Sachs does make a certain sense.

Looking at the two companies, you’d actually start to think these are the last people who should be getting in on plastic credit cards. Apple Pay was supposed to start the death cycle for plastic credit cards with its completely electronic version, and Goldman Sachs started up a whole consumer savings and lending business—known as “Marcus”—on the notion of getting people out of credit card debt.

Yet there’s a certain sort of sense in the notion. Apple Pay was originally irking banks because of the lost transaction fees, and Goldman Sachs—who’s now actively trouncing many competitors in both user experience and overall product offerings—is moving to provide Apple the infrastructure in question. The Apple Pay card will almost certainly find itself connected to Apple Pay accounts, as noted by Javelin Strategy payments analyst Michael Moeser, and will additionally offer Apple an extra revenue stream.

On the one hand, Apple could indeed put its name recognition and massive capitalization to work to make the Apple Pay card an attractive proposition. There could be co-branded incentives afoot that could catch interest and make the Apple Pay card a must-have in the walled garden of Apple Pay users, who have already been shown to be a devoted and high-spending lot.

On the other hand, though, there’s the issue of inertia. Apple Pay will actually celebrate its fourth birthday in just a few months. People have already linked their card of choice and had it in place for years; how many will actually go through the setup process with a whole new card?

If Apple can get some incentives strong enough to break inertia, then the Apple Pay card will likely be a winner thanks to the population of Apple users who will use pretty much anything Apple-branded. If not, then this will likely be a flop on par with the worst of them.