Apple to offer a credit card

Apple’s next big product might be a credit card

The new cards will be rolled out to employees for testing in the next few weeks and will be launched later this year.

The credit card move is a big step for both companies.

From an economic standpoint, we can see that Apple will receive a small share of each transaction - as and when the credit-card is used.

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The card will also offer cash back on most purchases, the Journal reported, with possibly higher returns on purchases of Apple products.

The credit card itself would allow Apple to take a larger cut of transaction fees than it now gets from its existing payment service Apple Pay, although the WSJ noted that the new product could potentially anger Apple's banking partners who account for the bulk of the transactions that now go through Apple Pay. However, existing contracts with other card providers prevented it from doing this. The two companies considered a more broad partnership that would include other financial services beyond credit cards, but Apple execs were anxious about the privacy issues that would be related to such an endeavor. The company has already partnered Barclays to issue Barclaycard with Apple Rewards, by which users can earn points from purchases made at Apple or elsewhere, which can then be converted to Apple Stores or iTunes Store coupons. It's now unknown if or how the Goldman Sachs partnership will affect the Barclaycard. That includes revenue from the App Store, Apple Music and Apple Pay - although as the Journal notes, Apple Pay "has been slow to catch on among users and merchants".

As rumors go, this one is certainly interesting. Goldman Sachs has been pushing its Marcus consumer banking product as part of a rebrand. While Apple's hardware sales are on a steep decline curve, Goldman Sachs too is facing headwinds in the investment banking business. Time will tell if the card pays off.

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