Sometimes incredibly complex premium credit card banking and finance deals don’t work out in the long run.
Per the Wall Street Journal, Apple will be ending its Apple Card credit card partnership with Goldman Sachs within the next 12 to 15 months.
It’s unknown as to whether Apple has established a new partnership for the Apple Card.
Apple and Goldman Sachs will dissolve their entire consumer partnership, including the Apple Card and the Apple Savings account. Apple in a statement that was provided to CNBC said that it will continue to provide “the best tools and services” for Apple Card customers.
A series of rumors from earlier this year suggested that Goldman Sachs wanted to leave the relationship with Apple as part of its plan to cut back on its consumer business. Goldman Sachs at the time was said to be speaking with American Express about a possible takeover, but the Apple Card needs to run on the Mastercard network until 2026 due to a deal established between Apple and Goldman Sachs. Amex also had concerns about aspects of the program such as loan loss rates due to Apple’s push to have customers approved, so the status of the talks is not known.
It’s also been rumored that Synchrony Financial, known as the largest issuer of store credit cards, has considered taking over the Apple Card.
Goldman Sachs and Apple have worked together on financing and backing the Apple Card since its 2019 launch and also teamed up for the high-yield Apple Savings account as well as the Apple Pay Later feature. It was noted that Goldman Sachs ran into customer service issues due to long wait times for disputed Apple Card transactions and issues with the Apple Savings account.
The U.S. Consumer Financial Protection Bureau launched an investigation into Goldman Sachs due to customer complaints, leading to tension with Apple. Apple is unhappy with the customer service reputation of its Apple Card and Apple Savings products, while some Goldman Sachs executives blame Apple for the regulatory scrutiny.
At the time the Apple Card was launched, Goldman Sachs was new to consumer banking, and within its deal with Apple, forewent collecting fees that many credit card issuers typically receive. The bank does not receive a cut of the fee that merchants pay to Apple to accept the Apple Card, nor is it able to collect annual fees, late fees, or foreign transaction fees. Goldman Sachs does earn money from loans issued to cardholders who split Apple purchases into installments. It’s currently unknown as to whether Apple will be able to establish a similar deal with another issuer because of the limited revenue the Apple Card provides.
Stay tuned for additional details as they become available.
Via MacRumors, The Wall Street Journal, and CNBC