Dive Brief:
- JPMorgan Chase will become the issuer of Apple’s credit card under a deal announced late Wednesday, with the card remaining on Mastercard’s payment network as current issuer Goldman Sachs exits the consumer lending sphere.
- The deal for the $20 billion card portfolio marries the tech behemoth’s base of customers for Apple smartphones, watches and other gadgets with the consumer-lending expertise of the largest U.S. bank.
- The transition of Apple card accounts from Goldman Sachs to JPMorgan is expected to take two years, JPMorgan said in the press release. The bank also said it will set aside $2.2 billion in the 2025 fourth quarter as a provision for expected portfolio losses stemming from the transaction.
Dive Insight:
Goldman Sachs is shedding the $20 billion of outstanding card balances with a discount of more than $1 billion, The Wall Street Journal reported Wednesday, citing people familiar with the matter. Apple and the banks had been negotiating the complex deal for more than a year, the newspaper said.
Goldman will continue to operate the Apple business during the 24-month transition, the bank said.
“Chase shares our commitment to innovation and delivering products and services that enhance consumers’ lives,” Jennifer Bailey, vice president of Apple Pay and Apple Wallet, said in the press release. “We look forward to working together to continue to provide a best-in-class experience and exceptional customer service with Apple Card.”
Apple and Goldman Sachs announced the new card in August 2019, touting no fees, greater transparency and “seamless integration” with Apple’s devices.
“Apple is an iconic brand recognized globally for its innovation, design excellence, and commitment to delivering exceptional customer experiences,” Allison Beer, Chase’s CEO of Card & Connected Commerce, said in the companies’ joint press release.
The Apple deal offers JPMorgan Chase “good use of their excess capital” and access to new customers to which they can cross sell additional products, Truist Securities analyst Brian Finneran wrote Thursday in a client note.
That bank “has more card expertise than GS and has scale/tech/experience to run the portfolio at an attractive return on equity,” he wrote.
The $20 billion represents only 1.4% of JPMorgan’s total loans, Piper Sandler analysts Scott Siefers and Frank Williams wrote Wednesday in a client note. “Thus, small in total for JPM but still an exciting headline and business capture,” they said.
Beyond new credit lending business, the deal gives JPMorgan demographic data on millions of customers to which it can market new products and services, PayGility Advisors analyst David True told Payments Dive in August. With the Apple card portfolio, JPMorgan would gain “many millions more customers who have Apple iPhone demographics and they can see what else those customers would be interested in,” he said.
In a client note Wednesday, Wells Fargo analysts were blunt in their assessment that the Apple deal was a disastrous consumer lending expansion for Goldman Sachs “that never should have happened.”
“It's still mind-boggling that GS used so many resources for so many years with its consumer expansion,” the team of five analysts wrote. “At least it is finally retreating to its historical strength.”
Goldman sold its General Motors credit card business to Barclays in October 2024, six months after it jettisoned its Marcus Invest consumer banking and investment shop to New York City-based Betterment. Goldman sold GreenSky, its Atlanta-based consumer finance fintech, to an investor consortium in October 2023.
“This transaction substantially completes the narrowing of our focus in our consumer business,” Goldman Sachs CEO David Solomon said Wednesday in a press release.
