Steve Jobs had a vision for Apple to offer a credit card. He was a proponent of a closed ecosystem, so you’d earn points for Apple products, not cash back. The currency was going to be called iPoints, and since music redemptions would be a key feature (“with the Apple Card, every purchase counts towards free music”) they had mocked up several tag lines:
- Buy bed, get R.E.M.
- Buy balloons, get Zeppelin.
- Buy lipstick, get Kiss.
- Buy raincoat, get Weather Report.
- Buy airplane ticket, get Train.
Apple Music is replacing iTunes, and while the Jobs’ 2004 vision for the card never came to fruition the company jumped partners from Barclays to launch a product with Goldman Sachs.
While the card offers largely unimpressive cash back – they’ve even already had the need to improve it – it’s innovative in other ways.
The Wall Street Journal revealed this weekend that though Apple claimed to have designed the card that isn’t actually accurate,
Thousands of engineers across Goldman were diverted to finish it in time for an August debut, delaying other projects. Apple ads for the card carried the phrase: “Designed by Apple, not a bank”—a line that didn’t appear in a giant banner ad in Goldman’s lobby this fall.
…When Apple unveiled the credit card on stage in March in Cupertino, Calif., it did so with a zinger: “Designed by Apple, not a bank.” Mr. Solomon and other Goldman executives watched from the audience. The same line was repeated in ads that Apple ran promoting the card.
Developing the Apple Card turned out to be a huge drain on Goldman‘s IT resources: Goldman Sachs spent $300 million “to build it” and “[w]hen early testing of the software this spring revealed a security vulnerability, Goldman reassigned thousands of engineers from around the firm to patch it, people familiar with the matter said.”
Apple, though, did design the monthly statements:
Apple wanted control over the monthly statements sent to cardholders, pushing for jargon-free disclosures and its own signature font. Goldman’s lawyers warned that veering from standard industry language could invite regulatory problems, but the bank compromised. Apple got its font and Goldman trimmed the fine print.
Goldman Sachs is likely to lose money on the product, since “no fees of any kind, software that actively encourages users to avoid debt or pay it down quickly, and potentially lower interest rates” hamstring the card’s revenue potential for its issuer. Goldman isn’t allowed to market customer data, either.