It would be logical step for Apple to set up its own Financial Services company that would issue CCs itself (using the Visa/MC network). Especially if Apple eventually gets into larger ticket items that are usually purchased on credit, like cars.
I believe the folks at Apple are smart enough to know how to manage that for now, but you’re always one Immelt away from insolvency when you play that game.
Sony seems to be doing okay, and their Sony Financial Holdings offers online banking services through Sony Bank, life insurance through Sony Life, and insurance through Sony Assurance (albeit only in Japan).
Playing in financial services can be lucrative if done well. The catch is that there is always an existential risk associated with it, and so if it’s not the core business I think anyone should be very very cautious about how they approach it.
If the existential risk can be offloaded to a partner while some upside is retained, it’s probably a good idea.
Why would that be a "logical" step? Goldman Sachs has already lost billions partially because Apple insisted on lower credit standards for applicants' approvals which resulted in a lower quality portfolio of credit-card holders that don't make their payments on time.
In a round about way, Apple (inadvertently) got a bunch of GS money to buy its expensive Apple products and the later issue of creditcard holders getting behind on their debt repayments is GS's problem instead of Apple's.
If Apple started a bank business to underwrite its own credit-card, what do they gain by taking on that extra financial risk? I suppose Apple could theoretically "gain" interest payments but Apple was the one pushing for less credit-worthy applicants which negates the point of getting interest money as profits. GS's losses of $1 to $3 billion already proved that model doesn't work.
It actually seems more logical for Apple to shop the Apple-branded creditcard to other potential backers such as Citi or Chase.
Sure, previous giant companies like General Electric started GE Captial, Sears started, Discover card, Toyota has Toyota Motor Credit... but that doesn't mean Apple wants to get into the bank business.
I thought they only made money when people didn't pay on time and thus have to pay interest payments?
That's a colossal clusterfuck in banking on GS side (not that they are that rare in banking generally, but they tend to learn quickly).
Are they allowed to do this in the US? I remember Walmart wanting to get into financial services, but ended up having to partner with an existing bank instead. Presumably for regulatory reasons.