Four years after partnering with Apple on the launch of its credit card, Goldman Sachs may be looking to exit its high-profile deal. The investment banking firm is reportedly considering offloading its partnership to American Express, which has been in talks with Goldman to take over the Apple Card and other ventures with the tech giant, the Wall Street Journal reported on Friday.
In a sign of how far the Apple Card has fallen behind other co-branded cards, Goldman Sachs reportedly wants to cut costs by shifting its relationship with the iPhone maker to AmEx. The move would sever ties with Mastercard, which currently backs the Apple Card, and a new buy now, pay later service launched in March.
However, if Goldman does end its partnership with Apple, it could affect consumers’ ability to use the card at various stores and other locations. The current version of the card is backed by Mastercard, which is accepted at most major retailers in the US, while American Express has only limited acceptance.
A transfer of the partnership to American Express could also impact what fees are charged by the card. For example, Apple Card doesn’t charge late or foreign transaction fees, while other credit card companies often tack on those and other customer charges.
Moreover, the Apple Card doesn’t report payment activity to credit bureaus, a decision that has drawn criticism from consumer advocates. That decision has also reportedly contributed to the bank’s high credit loss provisions, funds set aside for loans that are likely not repaid.
The company’s decision to abandon the Apple Card may also reflect how much more challenging it is for Goldman to make money in the credit-card business than its peers, who earn much of their revenue from interest income. Goldman’s consumer credit unit lost $1.2 billion over the first nine months of 2022.
In an investor presentation in January, the bank’s CEO, David Solomon, said he remained “committed to the Apple Card.” Still, it remains unclear whether the firm can recoup its investments in the project.
Neither Apple nor Goldman Sachs immediately responded to requests for comment from Reuters. The Wall Street Journal’s sources said the companies were in talks to finalize a handoff agreement and that it needed to be clarified when a deal would be done. The WSJ did say that Apple is aware of the discussions. Earlier this year, the Cupertino-based technology giant took control of its financial services offerings by creating a new division within the company to handle lending and payments. In addition to the Apple Card, that effort includes a savings account and a home improvement financing service called GreenSky. The moves signal how important it has become for Apple to generate revenue from its services rather than selling phones and other hardware. It has reportedly invested more than $27 billion in its finance initiatives.