Bloomberg News reports that Goldman Sachs Group Inc and Apple Inc are planning to team up so that they can offer savings accounts to the ones that use credit cards of the tech company.
Apple Card users can open a savings account that will be high-yielding and will be allowed to deposit their daily cash into it automatically. This will attract no fees, no minimum balance, and no minimum deposit prerequisites. Apple revealed this on Thursday in a statement. Daily cash refers to the rewards generated by card users using the purchases they make.
This step is a means to build on the existing credit card partnership between these two companies. In recent years, the Wall Street titan has been pushing to expand its offerings to its consumers, although the measures have been dogged by overrun costs and missed goals related to profitability. For Apple, Goldman has continued to remain a major partner even when the tech firm is working on migrating more of the financial services of the company in-house.
What does this move by Apple mean?
This move comes as Apple’s bet that its services, including financial services, will aid in the economy’s growth in the years to come. The services have already contributed more than 20% of the revenue, up from about 10% less in 2015. But the service of “buy now pay later,” which was introduced by Apple, has taken a long time to make inroads into the market than expected. It may be recalled that Apple Pay Later was scheduled to work with the iOS 16 software that is compatible with the new iPhones introduced last month.
Bloomberg News reports that Apple and Goldman Sachs are working on this service buy now and pay later for Apple Pay. It is anticipated that this might be able to take care of the purchases that are of a larger amount that have plans for longer payment terms.
The new proposal of Apple’s savings accounts service will let the users of Apple Card earn interest on the cashback that they will enjoy, which will be arriving in 1%, 2%, and 3% increments that will depend on the purchases have been made through Apple Pay, with select merchants, or Apple products.
Although Goldman and Apple have not announced the interest rates yet, Marcus, the existing savings account of Goldman, presently offers users an annual percentage yield of around 2.15%.
This partnership will likely encourage the users to store cash that they earn back with Goldman instead of Green Dot Bank, the existing Apple partner for the legacy credit card. Goldman eagerly has been enhancing consumer deposits. The prevailing savings accounts products of the firm are already holding an amount that exceeds $100 billion. These are complementary to the transaction banking business that takes place in the case of the corporate deposits of Goldman. This is yet another avenue of cheap funding.
Image source: Bloomberg