Apple ending Apple Card partnership with Goldman Sachs

Apple and Goldman Sachs are ending their partnership that currently consists of the Apple Card and Apple Card Savings Account. According to The Wall Street Journal, Apple has “sent a proposal to Goldman to exit from the contract in the next roughly 12-to-15 months.”

Update: In a statement to CNBC, Apple said that it will “continue to innovate” for Apple Card customers:

Apple and Goldman Sachs are focused on providing an incredible experience for our customers to help them lead healthier financial lives. The award-winning Apple Card has seen a great reception from consumers, and we will continue to innovate and deliver the best tools and services for them.

Apple and Goldman Sachs calling it quits

This news follows reports that Goldman Sachs was looking for a way out of its deal with Apple. The company has dramatically scaled back its ambitions in the consumer finance industry. According to regulatory filings, Goldman Sachs has lost a significant amount of money on the Apple Card partnership thus far.

The fate of Apple Card and Apple Card Savings account is unclear. “It couldn’t be learned whether Apple has already lined up a new issuer for the card,” today’s report says. There are, however, a few possibilities.

It should be noted that in these types of partnerships, the merchant – Apple in this case – “plays a controlling role.” This means that Goldman Sachs likely expressed its desire to end the partnership, and Apple sent the “proposal” at Goldman’s request.

The WSJ reiterates that Goldman has discussed offloading the program to American Express. Amex, however, voiced concerns about “several aspects of the program, including its loss rates.” Synchrony Financial has also reportedly considered taking over the Apple Card business.

Synchrony is among the companies that initially bid for the Apple Card partnership but was ultimately beaten out by Goldman Sachs. Today’s report says:

Goldman has discussed with American Express the possibility of handing over the program to the card giant. Amex expressed concern about several aspects of the program, including its loss rates, and it’s not clear if those discussions have continued. 

Synchrony Financial has also been looking into the possibility of taking over the credit-card program, some of the people said. Synchrony, the largest issuer of store credit cards in the U.S., lends to a wide spectrum of consumers, including those with lower credit scores. Synchrony, which originally bid against Goldman for the Apple credit-card program, for years has been trying to position itself as an issuer with close ties to tech companies and counts Amazon and PayPal among its largest card partners.

Apple has also been working internally to bring as many of its financial products in-house as possible. Referred to as “Project Breakout,” Apple is reportedly developing its own payment processing technology and infrastructure that would make it less reliant on partners such as Goldman Sachs.

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