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Chase Reportedly Nearing Deal to Acquire Apple Card Program
As Apple continues to seek a new partner for its popular Apple Card, a new report suggests that JPMorgan Chase could be nearing a deal to step into the role.
About Chase’s Potential Apple Card Takeover:
According to the Wall Street Journal, Chase is in “advanced talks” to acquire Apple’s credit card program from current issuer Goldman Sachs. These discussions began early last year but are said to have accelerated in recent months. However, the report warns that a potential deal could still fall apart.
A key cause of concern is the Apple Card’s subprime exposure. At the end of last quarter, 34% of credit card balances at Goldman belonged to customers with credit scores below 660 (a level considered “fair”). For comparison, only 15% of Chase balances fall under this category. Moreover, even Capital One — which has been known for specializing in subprime customers — has a rate of 31%. In total, Apple Card balances are around $20 billion.
Apple and Goldman Sachs have long been looking to go their separate ways after launching the Apple Card together in 2019. Although the card proved popular, unique aspects of the card have led to headaches for Goldman. For example, all Apple Card balances are due on the last day of the month, rather than being spread throughout the month like most cards. Additionally, the card doesn’t charge any late fees, which limits how much issuers can make from the product.
The two companies announced their intentions to end their partnership more than two years ago, with American Express, Capital One, and Synchrony all reportedly holding talks with Apple about a possible takeover of the Apple Card program. Meanwhile, Goldman Sachs sold its GM Credit Card program to Barclays as the bank looks to exit the consumer credit card business.
Should the Apple Card change issuers, there’s also a chance that it could swap payment networks as well. A previous WSJ report suggests that Visa has bid to replace Mastercard.
My Thoughts:
It’s pretty crazy that the reports of Amex considering taking on the Apple Card are now two years old! This Apple-Goldman saga has been playing out for much longer than you might expect given the popularity of the card. Of course, some of the features that make the card popular among consumers are also what make it less profitable or viable for issuers.
Whatever happens in terms of who own the Apple Card, it does seem like a foregone conclusion that some changes will come to the product when the switch is made. Obviously, Apple is a powerful enough company to push back in some areas, but they do need a banking partner to continue. So, will Chase and Goldman be able to strike a deal and finally usher in a new era for Apple Card — or will we be talking about this report in another two years? Your guess is as good as mine.
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Other Articles by Kyle Burbank
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