Apple, Goldman Sachs start issuing Apple Cards to consumers

Apple Inc rolled out its virtual credit card on Tuesday, working with bank Goldman Sachs Group Inc on the new iPhone add-on that may help Apple diversify from device sales and build out the Wall Street bank's new consumer business.

Apple announced the card in March, aiming to draw in iPhone owners by offering a card with 2% cash back on purchases with the Apple Pay service, no fees, an app to manage related finances, and a focus on data privacy. For Goldman, the issuing bank, the card builds on a foray into its Marcus consumer banking brand, started in 2015.

Apple said a limited number of consumers who expressed interest in the card will start to receive sign-up invitations on Tuesday. The card is designed to work with the iPhone, where users sign up for the card and can start using it immediately if approved via the Apple Wallet app and Apple Pay system.

Apple offers an option for a physical card made of titanium, but the physical card has no visible number. Instead, the card's number is stored on a secure chip inside the iPhone, which generates virtual numbers for online or over-the-phone purchases requiring a number. Apple has focused on privacy, saying that purchase information is stored on the user's iPhone and that it cannot see the information. Goldman will not be allowed to use data for marketing purposes, even for selling other Goldman products.

Gene Munster, managing partner with Loup Ventures and a longtime Apple watcher, said Apple Card adoption is likely to be low in the first year, but that Apple Card could generate about $1.4 billion of high-margin revenue by 2023, adding about 1.8% to Apple's overall earnings and complementing the much larger Apple Pay business for total payments revenue of $5.38 billion by 2023. Apple has roughly 50 million U.S. Apple Pay users now. But at Apple's size - $265.6 billion in sales for fiscal 2018 - the revenue matters less than the effect on keeping Apple customers tied to its brand, analysts said, said Ben Bajarin, an analyst at Creative Strategies.

"If it works, it's one more thing that causes you to stay deeply loyal and entrenched in the Apple ecosystem, even if something better comes along," he said

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