Apple may have finally solved its credit card partner problem

JPMorgan Chase is in advanced negotiations to become Apple 's new credit card partner, potentially ending Goldman Sachs ' troubled five-year relationship with the tech giant. The Wall Street Journal reported that Apple has identified JPMorgan as its preferred choice to replace Goldman Sachs in what could become one of the largest credit card deals in history.

The potential agreement would transfer Apple's $20 billion credit card portfolio to the nation's largest bank, cementing JPMorgan's dominance in the credit card market while giving Apple access to a massive consumer banking network. Discussions between the companies have accelerated in recent months, though no final deal has been signed.

Goldman Sachs exits consumer banking after mounting losses
Goldman Sachs has been seeking to exit its Apple partnership since 2023, following billions in losses from its consumer banking ventures. The investment bank has lost approximately $3 billion on its platform solutions business through 2022, with the Apple Card contributing significantly to these losses. CEO David Solomon acknowledged the partnership could end before its 2030 expiration date.

The Apple Card's unique structure has created profitability challenges for Goldman Sachs. The card charges no late fees and offers generous cashback rewards, eliminating key revenue streams that traditional credit card issuers rely on. Additionally, 34% of Goldman's Apple Card balances belong to subprime borrowers with credit scores below 660, compared to just 15% at JPMorgan.

Deal faces hurdles despite strategic value
Several obstacles remain before the partnership can be finalized. The high concentration of subprime borrowers is affecting the price JPMorgan would pay to acquire the portfolio, according to the WSJ report. Goldman's Apple Card delinquency rate stands at roughly 4%, above the industry average of 3.05%.

Apple previously explored partnerships with American Express, Capital One, Synchrony Financial, and Barclays before settling on JPMorgan as its preferred partner. The deal would strengthen JPMorgan's position against competitors like American Express and Capital One while providing Apple with a more stable banking partner for its financial services ambitions.

If completed, the agreement would represent a significant victory for JPMorgan CEO Jamie Dimon's strategy of expanding across multiple banking sectors.