Apple and Goldman Sachs are likely to end their Apple Card partnership within the next 12 to 15 months. This means that Goldman Sachs will no longer be the issuing bank for the Apple Card, and the Cupertino company will be forced to find a new partner which could be Chase (via Bloomberg).
Apple and Goldman Sachs first partnered in 2019 to launch the Apple Card. The Apple Card is a credit card that is designed to be primarily used with Apple devices. It has several enticing features, such as a titanium card, a daily cash-back program, and no late repayment fees.
However, the partnership between Apple and Goldman Sachs has not been without its problems. According to Bloomberg, the program has become rife with engineering problems, delays, and massive financial losses for Goldman Sachs. Additionally, there have been complaints about gender discrimination in credit limits and approvals.
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Goldman Sachs has been gradually scaling back its consumer banking operations, a move that includes discontinuing its co-branded credit card plans with T-Mobile and General Motors. The partnership with Apple represents a significant portion of this retrenchment strategy.
From Apple’s perspective, the Apple Card’s performance has fallen short of expectations. The card has not gained the traction Apple had anticipated, and it has weighed heavily on Goldman Sachs’s financial performance.
Chase, a prominent American bank headquartered in New York City, has emerged as the frontrunner to replace Goldman Sachs. Chase already maintains a strong relationship with Apple, serving as a key partner in cash management, Apple Pay, and the Ultimate Rewards program. Additionally, Chase offers Mastercard-branded credit cards, aligning with the Apple Card’s network.
Apple is also considering shifting its Apple Cash debit card operations to Chase. Green Dot Bank, the current backing partner for Apple Cash, has faced challenges and reliability issues. Chase’s extensive debit card network could provide a more robust platform for Apple Cash, offering benefits like ATM access.
The one area where Chase may not be the ideal fit is in managing Apple’s high-yield savings account. Chase typically offers lower interest rates on savings accounts compared to Apple’s current 4.15% annual rate. A potential solution could involve selling and distributing the savings account deposits among banks willing to match Apple’s competitive interest rates.
The relationship between Apple and Goldman Sachs was rocky from the start. Apple’s atypical demands, such as billing statements aligned with the calendar month and unorthodox designs for the physical card and customer agreements, caused development issues. Additionally, there were significant cultural clashes between Apple’s West Coast tech-oriented approach and Goldman Sachs’s traditional New York-style banking culture. These factors likely contributed to the breakdown of the relationship.
