Goldman Sachs is the issuing bank and Mastercard provides the payment network, but Apple owns the customer relationship.
From a note to Loup Ventures subscribers—the second to land on my desktop today:
The Apple Card brings consumer lending to a digital-first wallet. The card itself is not all that compelling. In fact, the card is more like a dongle that makes your digital wallet compatible with out of date point of sale systems.
In April, we published Apple’s Brand Promise Extends to the Wallet. In it, we wrote:
Apple’s brand promise is a secret weapon. The company’s brand has long stood for ease of use, quality, attention to detail, and simplicity. Their brand promise, in turn, has always been that ‘it just works.’ Increasingly, Apple’s message focuses on privacy and security. This shifts their brand promise from one based on ease of use to one based on trust.
That brand influence has moved beyond consumers and is increasingly influencing institutions, local governments, and healthcare providers to find new ways to work with the company. In addition to their tight hardware/software integration, Apple’s evolving brand will help the company build the most comprehensive digital wallet.
Central to Apple’s ability to offer the benefits of privacy and security is the company’s ownership of the tech stack, from hardware to software to services. The value of the strategy is obvious with Apple Card: complete ownership of secure payment devices with default financial software and services.
With a proprietary marketing channel (push notifications!) into a billion customers, it’s reasonable to assume that any one of Apple’s new services can drive significant incremental revenue. However, growing the ecosystem and making it sticky will still trump incremental revenue. After all, Apple is in the business of maintaining and satisfying an increasingly valuable base of recurring customers.
My take: Apple’s brand. Apple’s stack. Apple’s billion customers. Munster:
Goldman Sachs is the issuing bank and Mastercard provides the payment network, but Apple owns the customer relationship, effectively white-labeling the behind-the-scenes credit card services. If Apple Card were to switch to Chase and Visa next year, cardholders wouldn’t care.