JPMorgan Chase may become the backer of Apple’s credit card program following Apple’s split from Goldman Sachs last year.
JPMorgan Chase intends to assume responsibility for Apple’s credit card program, hinting at a large-scale credit card transition. These negotiations, which started earlier this year, have recently moved forward, though signing the final deal might take several months. Some of the essential features include the financial aspects of the merger, which are still to be finalized.
Apple previously collaborated with Goldman Sachs on its credit card and savings account services but ended their cooperation last year. This decision led Apple to look for new partners to manage its credit card service, which currently has over 12 million customers. Apart from JPMorgan, Apple has contacted other banking institutions, such as Synchony Financial and Capital One.
Cash Flow and Capital Strategies
JPMorgan could expand its operations by acquiring a credit card program that belongs to Apple. The bank would become a significant player in the credit card industry with the largest card business in the US, thereby obtaining potentially a large number of new customers. The iPhone and Mac computers are classic examples of the strong brand loyalty that Apple has established among its users. JPMorgan could offer Apple an opportunity to market other financial products to iPhone and Mac users.
On the other hand, Apple’s case highlights the importance of identifying a stable partner to manage its credit card services since Goldman Sachs is exiting this business domain altogether. Moving the program from Goldman to JPMorgan is not just about transferring the card balances that are with Goldman in the current process; the terms for the rewards program and other consumer-facing aspects are also largely to be negotiated.
JPMorgan’s Apple Card Negotiations
JPMorgan has an interest in some changes in how the Apple credit card is operated. JPMorgan intends to make a slight shift in the frequency of issuing a statement to the cardholders.
According to JPMorgan, Goldman would issue all statements at the beginning of every month under the management of Goldman, which the latter said complicates customer service as well as attracts regulatory attention.
The current ongoing negotiations also entail the estimation of the balances with the Apple card, which stand at about seventeen billion US dollars. Conventional credit card portfolios are usually bought out at par or at a premium. However, due to some special factors, such as exposures to subprime category, expensive terms connected with the Apple program, JPMorgan wants to obtain RMBSs at purchase price less than face value.