Apple and Goldman Sachs entered into a partnership in around February 2019 when the tech company announced Apple Card along with its now popular services like Apple TV+, Apple Arcade, Apple News, and more at an event that focused solely on services.
Journey of Apple Card
Apple Card was simply a credit card that allowed users to check their credit lines and apply for a credit card without sending a hard inquiry to the credit bureau. The credit card also made it possible to purchase Apple products including iPhone, iPad, and MacBook on monthly EMIs without paying any interest for a duration of up to 24 months. The early signs suggested that Apple Card has become a hit among users and Apple CEO Tim Cook even said during the earnings call in October 2019 that Apple Card was the “most successful launch of a credit card in the United States ever.”
Early signs of trouble for Godman Sachs
In November 2019, the first signs of trouble for Apple Card emerged when Bloomberg reported that Goldman Sachs is facing a probe from regulatory authorities after allegations of gender bias in the algorithm that was used for determining the credit limit for applicators. While Goldman Sachs issued statements justifying its algorithm for the credit limit, Apple remained tight-lipped on the whole controversy. Of course, it is the banking partner which decides the credit limit approval, but Sachs would have expected a sympathetic response from Apple after Apple Card suffered the backlash due to the controversy. Once the controversy settled, Apple Card saw unparalleled success and the tech company also launched Apple Card Family which allowed family members to use the same card via iCloud Family Sharing. Several Apple Card offers were announced by Apple throughout 2019 through 2022, including extending deadlines for users to convert monthly purchases into EMIs with 0% interest, offering daily cash credits to iPhone 13 buyers, a one-click payment option, and more. Apple Card reached the mark of 6 million active cardholders quite quickly. Then began trouble for Goldman Sachs. In 2022, Goldman Sachs announced that it is facing another probe from Consumer Financial Protection Bureau over Apple Card disputes. For the unaware, a chargeback or a dispute is a transaction when a customer says that the transaction was unauthorized or the services and goods availed were not up to the mark. Goldman struggled with Apple Card chargebacks as it received more disputes than it expected. In January 2022, Goldman Sachs revealed that it has suffered a loss of $1 billion since 2020 from its deal with Apple. And now, Goldman Sachs is expected to sever the partnership with Apple and offload its business to American Express.
