Apple will likely have to change Apple Card to attract a new partner, report says

Apple and Goldman Sachs are set to end their Apple Card partnership as soon as next year. A new report from today offers additional details on the challenges Apple and Goldman Sachs could face as they look to transfer Apple Card and Apple Card Savings Account to a new partner.

The Wall Street Journal first reported on Apple and Goldman’s agreement to end their partnership last month. According to the report, Goldman Sachs will exit the deal “in the next roughly 12 to 15 months.” The news comes four years after the Apple Card debuted and just months after Apple and Goldman expanded their partnership with the launch of the Apple Card Savings Account.

This week’s report comes from Reuters and describes the “rocky exit” that Goldman will face as it parts ways with Apple. “In searching for a buyer for its share of the partnership, Goldman will face pressure from bidders to reduce the value of its stake in order to make the price more attractive,” the report says while citing two sources familiar with the matter.

The report also outlines changes Apple might have to make to attract a new partner, with sources saying that “prospective bidders will likely push Apple to change the terms of the deal.”

For example, Apple currently touts that it does not sell or share Apple Card user data with anyone – and that includes Goldman Sachs. This is one of the reasons Goldman has struggled to turn the Apple Card partnership into a lucrative deal.

Today’s report says that any future Apple Card partner will “likely seek access to Apple’s proprietary credit card data.”

If the terms of the deal are adequately changed, Reuters sources say that Synchrony Financial, Citigroup, and Capital One are potential partners to take over the Apple Card relationship. When Apple first sought out a partner for Apple Card, it held discussions with JPMorgan Chase, but the bank passed on the deal “because their potential cut of profits was too small.”

Finally, the report adds some additional details about the financial arrangement between Apple and Goldman:

Goldman was responsible for setting aside the provisions for credit losses instead of sharing them with Apple, according to the two sources familiar with the business.

As the two companies sought to boost revenue, they granted cards to customers with lower credit scores, according to one of the sources familiar with the situation.

Actual loan losses would eventually be shared among the two partners, one of the sources familiar with the business said. The business costs were also divided, with Apple paying for marketing while and Goldman handled customer service, the person said.

9to5Mac’s Take

Even though Apple and Goldman have reportedly come to an agreement to end their partnership, there are clearly still a lot of unknowns about what’s next.

I don’t think Apple Card is going anywhere, but it’s starting to look like Apple might have to make at least a few concessions to attract a new partner. It could also, however, take the entire partnership in-house – but that poses its own set of hurdles.

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