The card, revealed Monday at an elaborate Apple event, is hamstrung by the still-limited reach of Apple Pay, according to analysts led by Rod Hall, a senior equity analyst at the bank. Users will get 2 percent cash back on purchases at merchants who accept Apple Pay, and just 1 percent where Apple Pay isn't accepted.
"Even though Apple Pay is becoming more available, we would still expect a large percentage of transactions to be done at the 1% return level (using the physical card) so we would expect the typical consumer to perceive the cash return rate to be OK but not great," the analysts wrote.
Apple Pay, the technology that allows people to use their iPhones to make digital payments, has steadily gained in acceptance since its inception in 2014. Apple CEO Tim Cook said Monday that it will be accepted at more than 70 percent of U.S. retailers and in 40 countries by year-end.
But it's still not as ubiquitous as traditional cards that run on the Visa or Mastercard network, some of which offer 2 percent or more in potential rewards. Apple had to create a titanium physical card for situations where Apple Pay isn't taken.
Part of the issue for Apple is that it's so massive, it's hard to move the needle with new products. The Goldman analysts assumed that Apple Card will garner 21 million users who spend $1,000 a month, generating $882 million in revenue. But that's a less than 1 percent boost to analysts' consensus earnings for 2020.
As a result, the card will probably have "little short term earnings impact" for Apple, according to the analysts.
— With reporting by Michael Bloom