Apple credit card: Goldman Sachs wants to get rid of the contract quickly
Goldman Sachs is making losses due to the Apple Card. But the US bank cannot get out of the contract. But CEO Solomon is not giving up hope.
Using an Apple Card in retail: users love it, but Goldman Sachs is worried about the credit card.
(Image: Apple)
Goldman Sachs (GS) is still trying to get out of a contract with Apple that requires the bank to issue the Apple Card credit card as quickly as possible. CEO David Solomon said during a call with analysts this week that the bank has a deal with Apple that officially runs until 2030. “But there's a possibility that it may not continue until that time frame.” The financial institution is making high losses with its entire credit card division, partly because the Apple Card is comparatively customer-friendly.
Return on equity shrinks due to Apple Card
The so-called Platform Solutions Unit, which issues the Apple Card, posted a loss of 859 million US dollars last year. Without the Apple Card, the return on equity would have been around 75 to 100 basis points, says Solomon, who is also known as an amateur DJ. However, he believes “that this will improve in 2025 and 2026”.
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GS has been looking for a bank or credit card issuer to take over the Apple contract for years. This was apparently formulated in a very stable manner, and unilateral termination by the bank is considered impossible. Most recently, it was said that the major American bank JPMorgan with its subsidiary Chase could take over. Negotiations with American Express (Amex), on the other hand, do not appear to have borne fruit. However, the last information on the possible Chase deal was months ago, so the negotiations could have broken down again. GS did not comment on this.
Credit card only in the USA, trouble for Apple due to customer service
The Apple Card has been on the market for five years and celebrated its birthday last summer. Not much has really happened since then. A possible internationalization has still not been realized, which also has a lot to do with Goldman Sachs' unwillingness (and the bank's lack of infrastructure). As a result, only people resident in the US can acquire the primarily digital credit card. It is free of charge and – has few drawbacks apart from the high-interest rate in revolving mode – as in the USA and elsewhere.
However, there are still problems with the service. GS and Apple together had to pay almost 90 million dollars in fines to the US financial regulator CFPB because there were many complaints about billing and the handling of disputes. Apple itself emphasized that these were “years ago”. Customer support for the Apple Card is provided by the Platform Solutions Unit of Goldman Sachs.
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