JPMorgan Chase is in discussions to take over the Apple Card credit card program, says a report from The Wall Street Journal.
The WSJ says discussions between Apple and JPMorgan have been going on since earlier this year, although a deal could still be month away, several important details still need to be worked out.
It was announced in 2023 that Apple and current card issuer Goldman Sachs would be ending their partnership that offers both credit cards and savings accounts.
Apple has since met with several potential partners, including Capital One and Synchrony Financial, says the report’s sources. American Express was also seen as a potential partner.
Apple and JPMorgan already have a relationship as JPMorgan pays Apple whenever one of its millions of credit card customers uses one of their cards through Apple Pay and it also offers deals on Apple products for their customers.
If the Apple Card talks are successful, Chase will add to the millions of cards it has already issued. Meanwhile, Apple will gain a new home for its popular credit card, which has 12 million users.
Goldman Sachs and JPMorgan will need to agree on terms and conditions of the card transfer, as the two financial firms will need to agree on a transaction price for the existing card balances. Other negotiations include the consumer rewards program for the Apple Card.
The report’s sources say JPMorgan is looking to pay less than half of the approximately $17 billion in outstanding Apple Card balances. Credit card portfolios traditionally sell at the loan balances value or even at a premium. However, Apple’s current credit card program has subprime exposure, as well as terms that could make it costly for any issuer to take on.
Chief executive of the credit-card and connected commerce business at Chase, Allison Beer, is reportedly spearheading the firm’s efforts to place a value on the Apple credit card program, and is briefing JPMorgan senior executives on the process, including CEO Jamie Dimon, who has said technology firms are quickly becoming competitors to businesses like JPMorgan.
“The banking system is not static,” Dimon told shareholders earlier this year. “There are startup banks, mergers, successful upstarts and fintech banks, and even Apple, which effectively acts as a bank.”
The WSJ’s sources tell it that JPMorgan would also like to shut down some pieces of the Apple Card program, including the requirement that all cardholders receive their statement at the beginning of the month. Goldman Sachs has faced customer service issues connected to the unusual billing structure, causing it to face regulatory scrutiny of its consumer-lending business, which is almost entirely focused on the Apple credit card.