Apple CEO Tim Cook introduces the Apple Card during a launch event at Apple headquarters in Cupertino, California, on March 25, 2019.
Noah Berger | AFP | Getty Images
Apple is talking to JPMorgan Chase for the bank to adopt the tech giant’s flagship credit card program Goldman Sachssaid a person with knowledge of the negotiations.
Discussions are still in their early stages and key elements of a deal – such as price and whether JPMorgan would continue certain features of the Apple Card – have yet to be decided, said the person, who requested anonymity to discuss the nature of the to discuss a possible deal. Talks could break down over these or other issues in coming months, this person said.
But the move shows the extent to which Apple’s choices were limited when Goldman Sachs decided to abandon its ill-fated retail banking strategy. There are only a few card issuers in the U.S. with the size and willingness to adopt the Apple Card program, which had saddled Goldman with losses and regulatory scrutiny.
JPMorgan is the nation’s largest credit card company by purchasing volume, according to the Nilson Report, an industry newsletter.
The bank is trying to pay less than face value for the roughly $17 billion in loans on the Apple Card because of high losses on the cards, the person familiar with the matter said. Sources close to Goldman argued that the higher-than-average delinquencies and defaults on the Apple Card portfolio were mainly due to the fact that the users were new accounts. Those losses were supposed to decrease over time.
But questions around credit quality have made the portfolio less attractive to issuers, at a time when there are concerns that the U.S. economy could be headed for a slowdown.
JPMorgan also wants to eliminate a key Apple Card feature known as calendar-based billing, which means all customers will receive statements at the beginning of the month rather than spread out over the period, the person familiar with the matter said. While this feature is attractive to customers, it means that service staff are inundated with calls at the same time every month.
Apple and JPMorgan declined to comment on the negotiations, which were previously reported by The Wall Street Journal.