Since the market for co-brand offerings is dominated by Synchrony therefore Lisa Ellis, an analyst for MoffettNathanson said that Apple offering a jointly developed credit card with Goldman Sachs instead of Synchrony Financial would be “odd”.
Ellis stated in an Email:
“Goldman must be offering Apple a very good deal.”
She further said that the partnership with Goldman “makes the card more risky for Apple,” since this is apparently “Goldman’s first foray into a consumer credit card.” She warned that the card “could blow up on them, particularly if we head into a macroeconomic slowdown.”
Ellis while analyzing the situation, also stated that “there’s nothing about what Apple is launching that makes it look like it will be particularly successful.” She expects that the “Apple zealots” may only be the consumers who would be appealed by the new card as she noted that there exist multiple co-brand cards which serve to appeal a specific consumer segment since they are niche offerings typically. On the other hand, heavy rewards are carried by big co-brands such as the Delta airline cards, Marriott/Starwood and Costco.
While assessing the profits connected to the newly developed business model which is going to run on Mastercard’s network rails, Ellis told that it doesn’t pose a threat to Visa’s business model as it will only go towards neutral-minus for Visa whereas marginally positive for Mastercard, and it’s just a minor win for it. No impact maybe observed on the acquirers of Global payments, First Data Corp., and Worldpay. Since Square, as a part of Square Cash Wallet is pushing into consumer financial health services therefore it may go into a neutral-minus whereas it being “another indication that Apple is continuing to invest in payments,” therefore for PayPal Holdings it may be a modest negative.
As a part of card launch, the features that Apple may pursue for the financial health of the Apple Wallet, Ellis is keeping a watch on them all. Ellis stated:
“If those features are good, and are available across any/all cards stored in the Apple Wallet, not just the Apple co-brand, then it would make the Apple Wallet, in conjunction with Apple Pay, potentially more threatening to PayPal.”
While referring to the most trending wallets these days which are Apple Wallet, Amazon Pay and PayPal, Ellis quoted:
“The overall ongoing trend is that the wallets continue to look for ways to provide ‘bank-lite’ services to get consumers to spend more time in their wallets, and less in their banking apps.”
In the trading of early Thursday, the shares of all associated companies fell specifically Apple’s declined about 0.6% whereas those of Goldman fell about 0.2%, there was 1% of trough in the shares of Mastercard and as across the board there was a fall in stocks, the shares of Paypal, Square and Visa fell as well.
As consumer finance was being pushed into deeper by the investment bank, a person who was familiar with the matter, reported in May that Apple’s new co-brand credit card was to be issued by Goldman.
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