Goldman Sachs Considers Exiting Deal With Tech Giant Apple

Banking giant Goldman Sachs is considering exiting the partnership deal that it has with Apple. The partnership between Goldman Sachs and Apple started in 2019, with the two institutions announcing plans to release a virtual credit card.

Goldman Sachs to exit credit card deal with Apple

A report by the Wall Street Journal in June noted that Goldman Sachs was holding talks with American Express to take over the bank’s Apple credit card and other ventures with the tech company.

Earlier this year, Apple announced a plan to work with Goldman Sachs to provide high-yield savings cards to its customers. The launch of the offering was aimed at delivering a vital solution at a time when banks were competing for customer dollars.

If the deal between Apple and Goldman Sachs is dissolved, it could result in the loss of some of the card benefits to users if the tech giant has to renegotiate the terms of the deal with a new partner. Apple has yet to issue a statement about this deal and whether it was seeking new partners.

While America Express is one of the top candidates that have been proposed to take over this deal, this partnership is less likely because of the initial contract. The contract requires that Apple Card run on the Mastercard platform until 2026. On the other hand, American Express does not run on the Mastercard or Visa network.

The souring relationship between Apple and Goldman Sachs

Goldman Sachs entered this partnership deal with Apple as part of an effort to venture into the consumer banking industry. At the time, the banking institution was motivated to close the deal with a high-profile brand such as Apple.

However, Apple Card has remained an unprofitable deal for Goldman Sachs, given that in 2022, the institution had announced losing more than $1 billion on this partnership. Moreover, the loss rate on credit card loans has also been an issue for the bank, given that more than a quarter of the Goldman Sachs credit card loans have been awarded to customers with a FICO score of below 660.

The bank has also had the challenge of providing robust customer service for the card. According to The Information, the CEO of Apple, Tim Cook, was rejected for this card while testing it. The bank said that the application was rejected because Cook was a high-profile figure that was often impersonated.

Customers also faced problems with the service. Goldman Sachs usually faced a challenging time handling customer service issues, and at some point, it was investigated by the US Consumer Financial Protection Bureau over how it handled refund requests, resolved billing errors, and handled other complaints.