tl;dr
JPMorgan is in advanced talks to acquire the Apple credit card business from Goldman Sachs, with competitors having withdrawn. Goldman has faced regulatory fines, technical issues, and financial strains since launching the Apple Card in 2019, including an $89 million CFPB penalty for misleading cust...
JPMorgan is in advanced negotiations to take over the Apple credit card business currently managed by Goldman Sachs. While talks between the banks and Apple continue, no final agreement has been reached. Competitors like American Express, Synchrony, and Barclays are no longer vying for the partnership, positioning JPMorgan as the likely successor.
Goldman Sachs has faced significant challenges since launching the Apple Card in 2019. Initially seen as a strategic entry into consumer banking, the partnership has been plagued by regulatory scrutiny, technical problems, and allegations of algorithmic bias. The rapid expansion strained Goldman’s balance sheet due to necessary reserves for loan losses. Additionally, the Consumer Financial Protection Bureau (CFPB) fined Apple and Goldman $89 million in late 2024, finding they misled customers regarding interest-free payment plans and mishandled disputes.
CFPB Director Rohit Chopra criticized the chaotic rollout and cited lapses in the dispute resolution system, which Goldman proceeded with despite warnings. The penalties included $19.8 million in restitution and a $45 million fine for Goldman, alongside a $25 million fine for Apple. The regulator also restricted Goldman from issuing new credit cards until they meet regulatory standards. Mounting internal dissatisfaction and concerns over a potential recession pushed Goldman CEO David Solomon to consider exiting the venture.
However, unwinding the partnership has proven difficult due to Goldman’s portfolio of customers with lower credit scores and contractual obligations extending through 2029. Besides the Apple Card, Goldman is also divesting its General Motors credit card business to Barclays. The bank held approximately $20.5 billion in credit card loans by the end of March 2024.
JPMorgan, the largest US credit card issuer by purchase volume, seeks specific changes before finalizing the deal. These changes reportedly include revisions to the Apple Card’s servicing structure. A major proposed modification involves eliminating the current calendar-based billing system, where statement dates are staggered, in favor of aligning all billing statements at the start of each month. There is also speculation JPMorgan aims to acquire Apple Card loans below their face value, reflecting the financial losses attached to the portfolio.
If JPMorgan secures this deal, it would strengthen its dominant position in US consumer finance and provide Apple with a steadier banking partner after years of regulatory issues. The evolving situation underscores the challenges and complexities of tech and finance partnerships in the modern credit card landscape.