Goldman is out: JPMorgan takes over Apple credit card business
After long negotiations, Goldman Sachs has divested its Apple Card business. The credit card will now be operated by another major bank.
Advertisement for Apple Card: The credit card has been available since 2019, but only in the USA.
(Image: Apple)
It has been known for a long time that Goldman Sachs, a financial institution primarily known for its investment business, wants to get rid of the Apple Card. The credit card product from Apple, designed to be quite user-friendly, a mix of a purely digital card and (if necessary) a physical payment method, resulted in billions in losses for the bank – partly because it failed to build a larger retail customer base, which was once planned. Now there is a new beginning for the Apple Card, which was launched in the USA in 2019.
21 billion becomes 20 billion US dollars
According to a report by the Wall Street Journal, Apple has agreed with the major bank JPMorgan Chase (US market leader) that it will take over the business from Goldman. However, this will be expensive for the bank: it had to accept a one billion US dollar reduction for the takeover to succeed. Currently, outstanding receivables are 21 billion dollars, but JPMorgan is only paying 20 billion.
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The price reduction is unusual. According to the Wall Street Journal, such co-branded card portfolios usually sell with up to 8 percent profit – sometimes even double-digit. “Discounts are rare and only intended for the most difficult cases.” Apparently, there are fears that Apple Card users, who are generally considered affluent, may not be able to pay their bills – allegedly there are “subprime” credit customers among them and a higher default rate than with other cards. However, it could also be because the Apple Card is completely free of charge – even in case of non-payment, there are initially only mild sanctions.
JPMorgan has experience with internationalization
JPMorgan is considered to be better positioned than Goldman Sachs to make the Apple Card a good business. 2.2 billion US dollars were set aside for potential defaults, it was said. It is assumed that the Apple program can be well integrated and that there is also potential for growth, according to informed circles. JPMorgan also reportedly plans to set up its savings account, similar to what Goldman had offered. This can be transferred if desired, according to the plans.
The transition is expected to take up to two years for credit cards and savings accounts. It remains unclear whether JPMorgan will finally drive the internationalization that Apple has long hoped for – JPMorgan has more experience in this area than Goldman. The bank had never seriously tackled internationalization over the years, even though Goldman operated a retail banking business in Great Britain. In total, pre-tax losses since 2020 are said to have amounted to seven billion dollars. Apple also did not release Goldman from the contract, insisting that the bank find a successor.
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