Apple May Be Looking to Replace Goldman, But Will Any Issuer Want the Apple Card?

Apple Inc. may be looking for a new bank to issue its Apple Card, but the big question is whether any potential candidate will want to take it on, some observers say.

Apple is apparently taking the initiative in finding a replacement for Goldman Sachs Group, which has issued Apple’s credit card since the product’s splashy launch in 2019. Up to now, it was white-shoe lender Goldman that was reportedly looking for an exit from its agreement to back the Silicon Valley giant’s card and its more recently issued buy now, pay later service, Apple Pay Later. “Apple is shopping for a more aggressive lender. This will be a long-term relationship,” says Brian Riley, co-head of payments at the research and advisory firm Javelin Strategy & Research.

All eyes have been on Goldman as it sent signals it was ready to bail on its Apple deal as losses piled up on a consumer business observers say the Wall Street firm was not geared to manage. Now, Apple has sent a proposal to Goldman outlining a plan to exit from its contract within the next 12 to 15 months, according to The Wall Street Journal. The deal had been extended only a year ago to 2029.

Apple and Goldman did not respond to a request for comment.

Candidates to replace Goldman could include American Express Co. and the private-label card issuer Synchrony Bank, according to the Journal story. Goldman held talks with AmEx this summer, as Digital Transactions News reported in early July. A Synchrony spokesperson said the company “cannot comment on rumor or speculation.”

With Apple apparently taking a more active role in finding a new issuer, the technology giant may find potential partners reluctant to take on a major credit product in an environment characterized by a rising cost of money. Apple is a “demanding” partner, Riley points out. “They want it their way. They don’t worry about your risk,” he says.

That risk could be substantial, Riley notes. “Every indicator says that [writeoffs and delinquencies] are up,” he says. “Household budgets are under stress.” As a result, he adds, “it will probably cost Goldman Sachs a good deal of money to get out” of its deal with Apple.

The timing for a portfolio sale is bad in other ways, as well, Riley notes, as credit card delinquency rates steadily climb. The rate has risen to 2.98% in the third quarter from 2.08% a year ago, according to the Federal Reserve Bank of St. Louis. “Everybody’s expecting a credit storm,” Riley says. “This is probably the worst time to be selling a credit card portfolio.”