Apple (AAPL) said Monday that it is launching high-yield savings accounts for Apple Card holders in partnership with Goldman Sachs (GS), marking the tech company's latest foray into payments.
The accounts offer an annual percentage yield of 4.15%, which Apple says is 10 times the national average, citing company data. The yield comes in slightly higher than a savings account with Marcus by Goldman Sachs and on the low-end of a top savings account list compiled by Bankrate.
The launch means more competition for big banks as depositors drain billions of dollars amid rising interest rates and bank failures last month. Apple and Goldman Sachs note in their deposit agreement customers deposits are FDIC insured. However, customers will not be allowed to hold more than $250,000 in their accounts.
The accounts can be filled with customers' Daily Cash rewards from Apple cards or funds from another bank account. They can also connect directly to Apple Wallet.
Both Apple and Goldman Sachs shares were muted on the news. Goldman Sachs is expected to report earnings before the opening bell on Tuesday.
Payments are part of Apple’s growing services business that has more than quadrupled annually in revenue since Apple Pay launched in 2014. Other parts of the services business include Apple Music, Fitness, and News.
Apple’s foray into the payment space is seen as a key growth driver for services moving forward, the company has said. On an earnings call in February, Apple CFO Luca Maestri said payment services are "continuing to set new highs all the time for us.”
Apple was the fourth most used online payment brand in 2022, according to a survey of 4,239 respondents conducted by Statista throughout 2022. PayPal and the company’s subsidiary, Venmo, dominated the survey, with 82% of respondents noting they used Paypal while 28% cited using Apple Pay.
But Apple has a base of more than 2 billion devices on its side.
“The iPhone has become so integral into people's lives. It contains their contacts and their health information and their banking information and their smart home and so many different parts of their lives,” Apple CEO Tim Cook said on the earnings call in February.
Other tech companies have made a push into financial services. Google offers Google Pay and Amazon offers its own payment service, Amazon Pay, as well as a partnership with buy-now-pay-layer service Affirm (AFRM).
JPMorgan (JPM) CEO Jamie Dimon recently highlighted Big Tech's increasing pressure in his annual letter to shareholders, calling out Apple Pay and Apple Card by name as competitors.
"The growing competition to banks from each other, as well as shadow banks, fintechs and large technology companies, is intense and clearly contributing to the diminishing role of banks and public companies in the United States and the global financial system," Dimon wrote. "The pace of change and the size of the competition are extraordinary, and activity is accelerating."
Josh is a reporter for Yahoo Finance.
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for Apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube