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Apple terminates credit-card and savings partnership with Goldman Sachs

SoQ錫濛譙 | Flickr

Apple Inc. approached Goldman Sachs Group Inc. to cancel its partnership with its credit card and savings accounts on Nov. 28.

Apple’s proposal would cancel the partnership within 12 to 15 months, leaving the tech giant to find a new banking provider for the Apple Card and Apple Savings services.

Apple Card was launched in 2019 and offers 3% cash back on Apple purchases and 2% cash back on Apple Pay purchases with a $0 annual fee. Apple Savings is the tech giant’s attempt at a high-yield savings account with a 4.15% annual percentage yield and no minimum balance and fees.

High-yield savings accounts are types of savings accounts that offer a relatively high rate of return based on the annual percentage yield or interest rate on the account. High-yield savings accounts are favorable because they offer a higher yield than conventional savings accounts.

Goldman Sachs launched its consumer banking business in 2016 to create a new revenue stream and diversify its business model. However, its consumer banking division continued to incur losses for the firm, eventually causing Goldman to step back from the division.

According to The Wall Street Journal, the bank approached American Express Company over the summer to take over the partnership with Apple so that it could officially end its consumer-lending business.

“Apple and Goldman Sachs are focused on providing an incredible experience for our customers to help them lead healthier financial lives,” an Apple representative explained to CNBC. “The award-winning Apple Card has seen a great reception from consumers, and we will continue to innovate and deliver the best tools and services for them.”

David Solomon, CEO of Goldman Sachs, expressed that the bank did some things right in the consumer banking division but ultimately was overambitious and took on more than they should have.

Apple Card and Apple Savings were created to boost the company’s services revenue — and succeeded, with $10 billion in deposits and continued growth. Investors and analysts believe the move by Apple is less risky considering the strong performance of both services.

“But what I find so fascinating is actually the card and the savings account have done quite well. I think the data they touted in August was that the program on the savings side had reached $10 billion in deposits,” Ed Ludlow, co-anchor of Bloomberg Technology, said on an episode of Bloomberg Technology. “But for Apple, nothing really changes, and the balance sheet is a really good point. It’s not as if it’s kind of a risky move for them.”

Conditionally, investors and consumers are speculating who will be Apple’s new financial service provider for the Apple Card and Apple Pay.

JPMorgan Chase & Co., alongside American Express, have become top contenders for the partnership with Mark Gurman, Chief Correspondent of Bloomberg News, citing Chase as the best fit for Apple.

“The bank that probably makes more sense as Apple’s new partner is Chase, which already has a significant relationship with the iPhone maker,” Gurman wrote in Bloomberg’s Power On newsletter. “Chase already has a strong network of debit cards that the Apple Cash card could fit into, offering customers perks like ATM access.”

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    LucDec 21, 2023 at 2:14 am

    Would live to see Chase or Bofa as a new partner for Apple.