Shulou(Shulou.com)11/24 Report--

Phoenix New Media Technology News Beijing time August 10 news, Apple is determined to control their own destiny, has tasted the sweetness of "self-research." In addition to developing key components such as chips and basebands, Apple is now eyeing banking.

At present, Apple is step by step into the financial sector. In March, Apple allegedly developed a secret plan codenamed "Breakout" to develop its own payment processing technology and infrastructure for future financial products and transfer its financial services to the company, including loan risk assessment and fraud analysis, with the aim of reducing its dependence on external partners.

In June, Apple launched the buy-and-pay service Apple Pay Later at the Global developer Conference. More importantly, Apple will handle its own loans for the service and will no longer rely on partners. Apple has set up a subsidiary called Apple Financial Co., Ltd. (Apple Financing LLC), which is responsible for Apple Pay Later's credit checks, makes decisions on loans for the service, and has the government loan license needed to provide this function.

The move marks the first time Apple has dealt with key financial tasks such as lending, risk management and credit assessment. This is a major shift for a company that started by selling computers. So far, Apple's financial services have been supported by third-party credit processors and banks. Apple Card credit cards, for example, rely on Goldman Sachs for loans and credit assessments.

When it comes to credit cards, Apple Card may be one of the earliest signs of Apple's foray into the financial business. Although there is a "Apple" logo on the card, it is basically a joint credit card with bank approval and other support behind it.

When Apple released its Apple Card in 2019, the company declared the credit card a "game changer", providing unprecedented simplicity and transparency.

At the time, Apple's partner of choice was Goldman Sachs, an investment bank. However, Goldman Sachs had not yet entered the consumer credit card field, and Apple Card was the company's first consumer credit card. So why didn't Apple choose an established credit card partner? In fact, Apple also negotiated with traditional credit card companies such as JPMorgan Chase, Citigroup and Barclays, but these banks did not undertake Apple business because their profits were too low.

As a "novice" in the US credit card industry, Apple Credit Card represents Goldman Sachs's biggest step into the financial life of ordinary Americans. While the main card issuers rely on decades-old technology systems, Goldman chose to build its own platform, according to people familiar with the matter.

Apple claims to revolutionize the credit card industry, but people familiar with the matter say that behind this, the rapid growth of Apple Card and the new service platform created by Goldman Sachs have created difficulties for them, making them more like a traditional card issuer than a customer-oriented disruptor.

Goldman struggled to handle a larger-than-expected number of controversial transactions, known in the industry as "credit card non-payment", according to people familiar with the matter. Credit card non-payment occurs when a customer requests a refund for a product or service for a variety of reasons. Pay consultants say the disputes have left banks at odds between customers and merchants, and have surged during the epidemic.

When Apple Card users challenge a deal, Goldman must find a solution within the time limit required by the regulatory requirements, but sometimes cannot. Customers sometimes get conflicting information or go through long waits, according to people familiar with the matter.

Goldman suffered more disputes than expected, according to a person familiar with the matter. "you need to clean up these queuing problems within a certain period of time. The business has become so huge that suddenly we have to create more automated programs to deal with it."

The nightmarish problems of serving Goldman's credit card business suddenly came into public view on August 4th. At the time, the New York investment bank disclosed an investigation by the Consumer Financial Protection Bureau into a range of billing and service issues. Goldman Sachs did not mention Apple in the filing, but so far, most of its $11.84 billion in credit card loans have come from Apple Card. In January, Goldman Sachs also launched GM's joint credit card.

Goldman said regulators were investigating its clients' transactions, "including refund applications, credits for substandard payments, bill error resolution, advertising and ways to report consumer information to credit agencies".

Regulators are focused on customer complaints over the past few years, the biggest reason for which is attempts to refund, according to people familiar with the matter. These disputes can be difficult to resolve because customers sometimes try to tease the system by seeking a refund for legitimate purchases. Moreover, merchants are not always willing to help. While refunds involving identity theft or goods never received should be clear, Goldman also faces more subtle cases where clients complain that activities such as music festivals are not worth paying so much and apply for a refund.

Several users complained on online credit card forums that although they provided evidence of fraud, Goldman initially refused to side with them.

"Goldman Sachs asked me to be responsible for the $930 fee I paid for using Apple Pay in the Apple Store, but I didn't spend it. So far, I've never experienced such unprofessional service from a big company. It's a nightmare." Users said in a post on Reddit, a social forum.

While Goldman provides clients with an automated way to register disputes through iPhone, the bank has done less to simplify solutions to such cases, according to people familiar with the matter. Goldman initially did not take into account what industry insiders see as a "fringe case", where it breaks the rules in the vast majority of transactions.

"We want to prove that we have a seamless way to handle controversial transactions," said people familiar with the matter. "but we did not get any praise at the front end and encountered some failures at the back end."

Another puzzling issue is that Goldman relies on three external suppliers to help serve Apple Card clients. This model is called business process outsourcing (BPO), but there is a high rate of staff turnover in this field, which increases the likelihood that the business representative is new or not fully trained.

In February, Apple sent notices to some credit card users, giving them the opportunity to resubmit old disputes. Apple admitted in an email that it "found that disputes initiated by some customers may not have been properly resolved".

Growing pains of course, there are also many users on the social forum Reddit who say that the experience of Apple Card is very good. The credit card won a customer satisfaction award from market research firm J.D. Power last year.

Goldman's problems are a growing worry, according to people familiar with the matter. There has been an unprecedented surge in the number of customers in this new business. By May 2021, Apple Card users had doubled from a year earlier to 6.4 million, according to Cornerstone, a consultancy. According to the Nielsen report, Goldman's total outstanding loans almost doubled last year.

In response to regulatory scrutiny, Goldman redeployed resources to automate more of the refund process. Meanwhile, frustrated Apple Card users on online forums say there is a sure way to improve Goldman's response.

"after six calls, three supervisors and four months of waiting, the problem was magically solved," said one Reddit user. "suspiciously, just a few days ago, I filed a complaint with the Consumer Financial Protection Bureau, stating all my problems. If you are in the same situation, complain to the Consumer Financial Protection Bureau."

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