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Apple Credit Card Partnership With Goldman Sachs Nears Its End
November 29, 2023
According to various media outlets reporting this Tuesday, the iPhone maker has decided to pull the plug on its Apple credit card program’s partnership with Goldman Sachs. The existing agreement will reportedly expire within the coming 12 to 15 months, a turn of events that’s caught the public’s attention, considering the hype the original launch mustered.
In 2019, Apple and Goldman Sachs embarked on this venture, introducing a new credit card to the public. Not just any card, it was marketed as a credit card “not from a bank,” designed to appeal to the vast user base of Apple customers. A glitzy marketing campaign that garnered significant consumer enthusiasm complemented the launch.
This news is a stark contrast from last year’s announcement — Goldman Sachs had stated that its collaboration with Apple was expected to extend until at least 2029. The Wall Street Journal suggests that the magnitude of the consumer credit cooperation took Goldman Sachs by surprise, leaving them struggling to provide the necessary customer service and back-end resources. Talks of transferring the program’s responsibilities to potential successors like American Express were also mentioned.
The latest development marks another shortcoming in Goldman’s consumer credit investments, following the recent discontinuation of its General Motors-affiliated credit card. The company publicly admitted to losing $3 billion on consumer banking since 2020, mainly comprising provisions for potential bad debts.
“I think it became clear to us early in 2022 that we were doing too much, it was affecting our execution.”
David Solomon, chairman and CEO of Goldman Sachs, via The Hill
On the other side of the coin, Apple might face challenges in bolstering its service revenue due to this development. The company has been actively trying to offset the slow decline in product sales by increasing its service revenue. The most recent quarterly report showed a 1% drop in product sales, while service revenue exhibited a robust growth of 16%.
The credit card and savings accounts serve as an effective means for Apple to enhance the iPhone’s appeal, imparting more value and features to its customers. Moreover, these financial ventures also provide a boost to Apple’s rapidly expanding services sector through additional fee-based revenue. The future of Apple’s financial products remains somewhat ambiguous if it decides to cut ties with Goldman Sachs. It’s not yet evident whether Apple has identified a new partner or if it’s contemplating a more comprehensive overhaul of its financial product lineup.
“Apple and Goldman Sachs are focused on providing an incredible experience for our customers to help them lead healthier financial lives. 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.”
Apple Representative via CNBC
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