After big losses, Apple’s main finance partner wants out of consumer finance
APPLE AND GOLDMAN Sachs Group Inc., which provides the banking back–end for Apple Card, are parting ways. It is unknown whether this will mean any changes for users.
Apple Card was announced in March 2019 as part of a landmark expansion of Apple’s services offerings, along with Apple TV+, Apple News+, Apple Arcade, and more. Industry observers were surprised that Apple’s chosen partner was Goldman Sachs, which had never issued a consumer credit card before. But Apple’s proposition was a leap into the unknown, and it later emerged that other financial institutions —JPMorgan Chase & Co., American Express Co., and Citigroup Inc. —had all turned it down.
Apple Card proved popular with users and grew rapidly. Built into Wallet on iPhone, it offered security and convenience, a simplified application process, no fees, and unlimited Daily Cash back on every purchase. New benefits were soon added, starting with interest–free financing when you used the card to purchase an iPhone. This later extended to the rest of Apple’s products. In 2021 came Apple Card Family, making it possible to merge credit lines with a “co– owner” or add “participants” such as children, who can build their own credit history.
In April 2023 the high–yield Savings Account was introduced, also operated by Goldman Sachs, with the option of having your Daily Cash deposited automatically —an option that Apple says 97% of Savings customers chose to take up. After just four months, Apple announced that Savings had reached more than $10bn in deposits.
While all this was great for the user, however, it wasn’t smooth sailing for Goldman Sachs. As early as November 2019, regulators were looking into controversial accusations of gender bias in the way it determined credit limits, and in 2022 the Consumer Finance Protection Bureau launched an investigation into its sluggish handling of Apple Card disputes.
Even worse, Goldman Sachs was losing a lot of money on its credit card business —an eye–watering $3bn total losses from the start in 2019 to date. It is believed to be looking to exit the consumer market entirely, including not just Apple Card but its other consumer credit card co–branded with General Motors. It has scaled back Marcus, its broader consumer banking business, and also pulled out of talks with T–Mobile about another co–branded credit card.
Goldman Sachs’ contract with Apple isn’t up for another five years, but Apple has accepted its wishes and proposed a phased withdrawal over 12 to 15 months. Users might face some disruptions as systems transition to a new provider —whoever that may be. Goldman Sachs reportedly approached American Express about taking over, but Amex is not as widely available as Mastercard, the payment
