“The sniping began shortly after Apple unveiled its new credit card with Goldman Sachs,” Hugh Son reports for CNBC.
“Within the industry, the deal is widely perceived as one that’s risky for a bank to take on,” Son reports. “Citigroup was in advanced negotiations with Apple for the card but pulled out amid doubts that it could earn an acceptable profit on the partnership, according to people with knowledge of the talks. Other banks, including J.P. Morgan Chase, Barclays and Synchrony, also bid on the business.”
“It turns out that the Apple Card’s consumer-friendly features — no fees of any kind, software that actively encourages users to avoid debt or pay it down quickly, and potentially lower interest rates — make it harder for banks to make money on the product,” Son reports. “Big card issuers profit when customers fall into debt and stay there. Americans paid $113 billion in credit card interest to banks last year, nearly 50% more than five years ago. So adopting the new fintech ethos of zero fees and transparent pricing makes for thinner profit margins.”
Read more in the full article here.
MacDailyNews Take: Sour grapes. Citigroup blew it. Apple and Goldman Sachs have a hit on their hands. The results of our poll taken last month speak volumes:
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