JPMorgan Chase, a leading global financial institution is reportedly in talks with Apple to take over the tech giant’s credit card program from Goldman Sachs.
The negotiations, first reported by the Wall Street Journal, which reportedly gained momentum earlier this year, could see JP Morgan acquire Apple’s credit card business, which currently serves over 12 million users and has $17 billion in outstanding balances.
Recall that since the launch of the Apple Card business in 2019, Goldman Sachs has been the issuer of the credit card. However, the relationship became rocky in recent years, until November 2023, when a CNBC report revealed that Apple issued a proposal to Goldman Sachs to end its credit card and savings account partnership within the next 12 to 15 months.
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In 2023, Goldman and Apple began exploring alternatives, reaching out to multiple lenders, including American Express. However, some negotiations faced delays, partly due to concerns over the Apple Card’s high loss rate. This positioned JPMorgan as a potential buyer, with sources indicating that Goldman might sell the Apple Card program for less than its face value. However, insiders maintain that a deal is still in the works and could take months to finalize as crucial elements, such as pricing, remain under negotiation.
Goldman Sachs’s decision to exit the consumer banking Space, which included the $17 billion Apple Card Program, stems from the firm’s decision to refocus on its core business. The Apple Card launched in 2019 as a cash-back card tailor-made for the brand’s enthusiasts. With a $0 annual fee, 3% cash back on eligible Apple purchases, and 2% cash back on Apple Pay purchases, the card is a decent choice for anyone who frequently uses Apple’s payment service. For Apple, credit card and savings accounts are a way to add value and additional features to its iPhone, as well as bolster its quickly growing services business with fees.
Aside from JPMorgan, Apple has also been in discussions with other potential suitors, including Synchrony Financial and Capital One, as it seeks a new home for its credit card program. For JPMorgan, securing the Apple Card deal would significantly bolster its already strong presence in the US credit card market, providing access to Apple’s vast and loyal customer base. However, the bank is reportedly negotiating a purchase price below the face value of the outstanding balances, citing concerns over the program’s subprime exposure and the potentially costly terms involved.
The outcome of these negotiations could have considerable implications for both companies. For Apple, a deal with JPMorgan would allow the tech giant to continue its expansion into financial services with the backing of a major banking player. For JPMorgan, acquiring the Apple Card program would represent a substantial expansion of its credit card business and could lead to a deeper partnership with one of the world’s largest technology companies.
JPMorgan Chase could take over Apple’s credit card program, The Wall Street Journal reports, citing anonymous sources. Goldman Sachs, the initial partner on the credit cards, abandoned its ill-fated foray into consumer finance last year and pulled out of the Apple project after taking some heat for its rocky start. Apple had reportedly been in talks with Capital One and Synchrony to take over its card, which has some 12 million users. Sources tell the Journal that JPMorgan’s involvement is far from a done deal, as the bank is seeking concessions on details including billing practices and price.