Apple is offering Apple Card users a way to grow their Daily Cash rewards by depositing it into a savings account from Goldman Sachs, which yields upwards of 4% a year.

This new offering is the most recent in a string of financial efforts from Apple, which are helping the tech giant compete directly with banks. Last year, Apple rolled out a credit card offering—also with Goldman Sachs—and this year the company rolled out a native BNPL program. Apple also has a digital wallet associated with its Apple Pay app.

Apple’s entry into the savings account market is a clear indication of the rapidly evolving payments industry, where the integration of technology and finance is driving innovation and competition. And considering Apple’s extensive customer base and established brand, it will surely have a substantial impact on the industry.

Competition Is Heating Up
Apple isn’t the only tech company making a name for itself in the financial space. In fact, many businesses are increasingly adopting strategies to encourage customers to switch to digital wallets by incorporating additional features that offer greater value and convenience.

Square recently acquired Afterpay, a BNPL company that allows customers to pay for purchases in installments. Similarly, PayPal added cryptocurrency trading options to its digital wallet, enabling customers to buy, sell, and hold various digital currencies.

Other inroads on banking are being attempted by Twitter.

Elon Musk, the CEO of Tesla and SpaceX, has hinted to turning Twitter into a payments company by incorporating a payments feature within the platform. This would allow Twitter users to send and receive payments directly through the platform, eliminating the need to switch to other payment apps or services.

Musk believes that this feature could help Twitter monetize its platform and reduce its reliance on advertising revenue. With the rise of digital payments and the growing adoption of cryptocurrencies, integrating payment options could also help Twitter stay competitive in a rapidly evolving market. There’s no doubt this will be a space to continue to watch for, as these tech companies evolve over time, with some businesses possibly eclipsing their founding business model. Amazon, after all, started selling books. Perhaps we’ll look back fondly on Apple and remember a time when it was simply selling hardware.

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For many people, saving for retirement can seem like a daunting task. However, there are a number of employers who offer programs that can help their employees save for the future. One such program is payroll deduction, which allows employers to deduct a certain amount of money from each paycheck and deposit it into a savings account. Another common retirement savings program is a 401k, which allows employees to set aside a portion of their income for retirement. Employers often match a percentage of employee contributions, making 401ks an especially powerful tool for saving for the future.

The Emergency Savings Act of 2022

Congress is playing at financial product development again.  Nasdaq reports that a bill has been introduced that would encourage employers to convince employees to set aside a small amount of money ($2,500 annual maximum, according to the article) into an account that could earn interest.  The contributions are directly from consumer’s earned payroll.  Unlike 401K plans, or healthcare savings plans, these accounts don’t offer a tax benefit.  Without a tax benefit, I’m not sure why legislation is needed.  Employees can set aside money from their paycheck to go directly into a savings account today.  Many employers encourage this activity and some even offer matching.  I am not sure we need a bill to codify what is already available.  If you have more background, please contact me.

Here are some more details from the article:

The Emergency Savings Act of 2022 was introduced in May by Senators Cory Booker (D-NJ) and Todd Young (R-IN). It establishes so-called Pension-Linked Emergency Funds, which will help employees save for emergencies through payroll deductions and help improve their personal finances.

While the emergency funds are tied to employer retirement plans, they aren’t limited to pension plans. Instead, a Pension-Linked Emergency Fund may be linked to a defined contribution plan, such as a 401(k).

At its core, a Pension-Linked Emergency Fund is an emergency fund that is managed like an employer-sponsored retirement plan. Funding of the emergency fund is similar to funding a 401(k), with deferred contributions automatically being deducted from one’s paycheck. Unlike a 401(k) contribution, an emergency fund contribution would not include any tax benefits, meaning that any contributions are fully taxable as ordinary income. The bill contains a provision to allow automatic enrollment of up to 3% of compensation.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

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