CardsFTW #79: Pain in Payments

Plus, a Money20/20 Preview, and a new airline card.

Pain in Payments

I wrote back in CardsFTW #65 that Goldman Sachs was reportedly looking at how to exit its Apple Card business. The chatter in this space has jumped in volume as the bank sells its Green Sky consumer financing business, and The Wall Street Journal followed up with an article stating that “employees say it (leaving consumer) can’t happen fast enough.”

Many credit card issuers and consumer lenders are experiencing pain right now due to rising interest rates and increasing defaults by their consumers. The challenges are all part of the typical consumer credit cycle, but for a bank like Goldman Sachs that hasn’t been through this as a consumer bank before, it is causing larger challenges.

The article highlights some decisions made by Apple in the name of simplicity that caused havoc at its banking partner, such as all consumer statements closing at the end of the month. A typical card program will have each consumer's statement ending on whatever day of the month their account was first opened, which spreads out the volume of cardholders contacting the bank. With Apple’s approach, all of the problems will occur within a few days.

I think the physical card would be more fun if it was as colorful as the digital version.

The simplicity may seem to be consumer-friendly, but a better approach is offered by many banks, including American Express, which allows consumers to change their due dates to best fit their personal cash flows. All of these little decisions, plus very large ones like underwriting a broad spectrum of borrowers, will surely be part of the challenges at Goldman Sachs.

The bank also issues a credit card for General Motors (not as compelling as Apple). In this way, Goldman Sachs is in a very tough spot. It is neither so small in credit as to easily sell its portfolio nor so big as to have the economies of scale that an issuer like Chase or Citibank has.

“LG CARDMEMBER”? Missed opportunity for fun names like “Camaro McEscalade”

People like this card, though, the Apple Card ranks highest in customer satisfaction among co-brand credit cards with no annual fee, according to J.D. Power’s 2023 US Credit Card Satisfaction Survey.

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Payment cards are everyday tools in our modern society and have greatly reduced friction in how we buy things, reduced fraud risk for merchants (due to counterfeit cash or bounced checks), and enabled faster checkout (not to mention all of e-commerce). However, merchants continue to find accepting cards painful because of the fees. Two items on this front cropped up this week.

The Wall Street Journal reported on the growth of cash discounts. The article highlights data from the Federal Reserve Bank of Atlanta that the share of transactions with cash discounts has grown from 1.76% of all transactions in 2015 to 2.93% in 2022, which is 8.95% growth. That’s a lot of cash discounts, especially when you consider that the Federal Reserve Bank of San Francisco says that 80% of all purchases were made by card or app last year.

Many states and payment networks like Visa and Mastercard restrict surcharges for credit cards, so the loophole is to increase your rates and create a discount for paying with cash. The rules don’t apply to all categories, such as rent or utilities, where surcharges are more frequent (up to 40% of rent payments carry a surcharge, per the Atlanta Fed). Federal law prohibits businesses from charging consumers additional fees for debit card usage. Even debit cards don’t escape merchants' wrath, though, the Supreme Court just agreed to hear a case from a merchant in North Dakota regarding the regulated debit fees being too high.

Many consumers, myself included, don’t change their behavior and simply pay the card surcharge. You might not have the cash on hand (or in your account); you might want your rewards; or you might just prefer paying electronically. Merchants position this as a way to keep prices in line, when it is more directly an excuse for raising prices. Lots of things cost merchants money (rent, goods, staff, insurance, etc.), and as consumers, we expect all of those costs to be included in the sales price. Yet, people think that payment processing should be free (as if it doesn’t cost money to manage the process). Well, it isn’t. We’ll continue to see this spinning of the story as to who is paying for the banking services, but in my view, it’s just another part of inflation.

Money 20/20 Preview

Next week is fintech’s biggest week of the year when 10,000 fintech nerds descend on Las Vegas to conference. I feel like it’s a high school reunion, but with better food. I love going and seeing so many friends, former colleagues, and business partners. My schedule is quite packed, but if you want to try to meet up, please send me a note! I hope to see you outside a coffee shop or at a party. Not sure what to attend; check out Totavi’s own Money20/20 Party Tracker!

If you’re looking for me, this is a good guess of a location

The Credit-Cards-as-a-Service Report is Almost Here

The entire Totavi team has been hard at work over the past two months on an in-depth report about the Credit-Cards-as-a-Service space: who are the players, why a brand would want to work with one of these platforms, and details on how everything works. We’ll announce the availability to this list. People who are subscribed and not in a free trial will receive a large discount, so I encourage you to upgrade to a paid CardsFTW subscription today.

A New Airline Card

Cardless* announced its latest airline partnership with TAP Air Portugal this week. The flag carrier of Portugal joined LATAM as one of Cardless’s travel card products, showing that fintech credit-cards-as-a-service platforms are winning deals for programs that traditional issuers previously served.

TAP is a member of the StarAlliance and serves more than 30 countries. Before this card launch, TAP fliers could transfer miles from other US programs but didn’t have a branded card offering available. The new card has a $79 annual fee, a reasonable signup bonus (60,000 miles after spending $2,500) and earns 3x points on TAP purchases, 2x points on hotels, car rentals, and rideshare, and 1x point on all other purchases. The card also includes lounge passes, extra baggage, preferred boarding, and status miles. The card operates on the American Express network, marking Cardless’s second card in partnership with Amex (after the Simon Malls card).

With the growth of fintech issuers, I expect we will see more cards in the market, which bodes well for consumers.


CardsFTW is a weekly newsletter, released most Wednesdays that offers insights and analysis on new products in the credit and debit card industry for both consumers and providers. CardsFTW is authored and published by Matthew Goldman and Ellen Perl of Totavi, LLC. Totavi is a boutique consulting firm specializing in fintech. We bring real operational experience that varies from the earliest days of a startup, to high-growth phases, and public company leadership. Visit to learn more.

*Indicates a company where Totavi, LLC has a business relationship.


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