Apple CEO Tim Cook introduces Apple Card during a launch event at Apple headquarters in Cupertino, California, on March 25, 2019.
Noah Berger | AFP | Getty Images
Litter is in discussions with JPMorgan Chase for the bank to take over the tech giant’s flagship credit card program Goldman Sachssaid a person with knowledge of the negotiations.
Discussions are still early and key elements of a deal — such as pricing and whether JPMorgan would retain certain Apple Card features — have yet to be decided, said the person, who asked not to be identified discussing the nature of the potential deal. Negotiations could break down over those or other issues in the coming months, the person said.
But the move shows how limited Apple’s choices were when Goldman Sachs decided to pivot from its ill-fated retail banking strategy. There are only a handful of card issuers in the U.S. with the scale and appetite to take on the Apple Card program, which has saddled Goldman with losses and regulatory scrutiny.
JPMorgan is the country’s largest credit card issuer by purchase volume, according to the Nilson Report, an industry newsletter.
The bank is trying to pay less than face value on about $17 billion in Apple Card loans because of high losses on the cards, the person familiar with the matter said. Sources close to Goldman have argued that higher-than-average delinquencies and defaults on the Apple Card portfolio were mainly because the users were new accounts. Those losses should decline over time.
But issues related to credit quality have made the portfolio less attractive to issuers at a time when there are concerns the U.S. economy could be headed for a slowdown.
JPMorgan is also looking to end a key Apple Card feature known as calendar-based billing, which means all customers receive statements at the beginning of the month instead of staggered throughout the period, the person familiar with the matter said. The feature, while appealing to customers, means service staff are inundated with calls at the same time every month.
Apple and JPMorgan declined to comment on the talks, which were previously reported by The Wall Street Journal.
