Apple is reportedly in talks with Barclays and Synchrony Financial to replace Goldman Sachs as its credit card partner.
Apple explores new credit card partnership
This potential shift comes as Goldman reassesses its consumer finance ambitions, signalling a possible early termination of its Apple Card partnership, originally set to run through 2030.
Goldman Sachs partnered with Apple in 2019 to launch the Apple Card, a move that marked the Wall Street giant’s foray into consumer finance.
However, the partnership has proven to be less profitable than expected.
Goldman CEO David Solomon recently acknowledged that the Card has been a drag on the firm’s overall return on equity (ROE) by 75 to 100 basis points, contributing to the firm’s decision to scale back its retail ambitions.
“We have a contract with Apple to run that partnership until 2030, although there is some possibility that it won’t continue until that time frame,” Solomon said during the company’s quarterly earnings call.
During its quarterly earnings call, Goldman announced strategic changes, including the sale of its GreenSky platform and transitioning the General Motors credit card program to Barclays in 2024.
These moves highlight Goldman’s intent to refocus on its core strengths in trading and investment banking.
Potential New Partners
Barclays, a prominent player in the credit card space, is emerging as a strong contender to replace Goldman Sachs.
The bank recently expanded its US card footprint by acquiring General Motors’ credit card business, allowing customers to earn rewards on vehicle purchases.
Synchrony Financial, a leading card issuer known for retail partnerships, is also in discussions with Apple.
Negotiations between Apple and Barclays have been ongoing for months, though a final agreement could take additional time.
JPMorgan Chase has also been linked to discussions about the Apple Card in previous reports.
The Apple Card’s Impact
The Card has been a pivotal component of Apple’s growing financial ecosystem.
Offering features like cash-back rewards and a seamless integration with Apple Pay, the card has helped Apple further embed itself into consumers’ daily lives.
However, the financial terms of the partnership have made it less attractive for Goldman and other potential issuers.
Despite challenges, the Card remains a sought-after partnership opportunity.
With Apple’s global brand recognition and extensive customer base, financial institutions see significant potential for growth in aligning with the tech giant.
As it explores new partners, the payments landscape continues to evolve.
Financial institutions are increasingly balancing profitability with the appeal of partnering with global brands like Apple.
The outcome of these negotiations could reshape the Card’s future and set the stage for further innovation in tech-driven financial services.
This transition underscores the competitive dynamics in the payments sector and the ongoing push by traditional financial institutions to navigate partnerships with tech companies in an era of rapid digital transformation.
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