Four years after teaming up to launch a credit card, Apple (AAPL.O) is pulling the plug on its partnership with Goldman Sachs Group (GS.N). The tech giant recently sent a proposal to the Wall Street bank to exit the contract in the next 12 to 15 months, the Wall Street Journal reported on Tuesday. The exit would cover their entire consumer partnership, including the Apple Card and a high-yield savings account that the companies rolled out this year. The move marks a complete 180 for two firms that extended their partnership a year ago through 2029. It also comes as Goldman is retreating from its push into consumer lending. It lost billions in its attempt to build a full-service consumer operation.
The decision to drop the partnership could be a blow to Apple, which has been heavily relying on its services business to offset slower iPhone sales. Last month, the Cupertino, California-based company said its new high-yield savings account, built into the Wallet app on iPhones and earns 4.15% in interest, had climbed past $10 billion in user deposits.
In April, Apple introduced a buy now, pay later service in the United States, enabled through Mastercard Installments. At the time, the company stated that Goldman was the issuer of the Mastercard payment credential used for these transactions.
The Apple Card offers no late-payments or annual fees, and it provides users with insights into their spending habits and trends. It also allows consumers to choose their card security features, and the virtual card can be used in a wide range of apps that support mobile payments. The card is also designed to work seamlessly with Apple products like the iPhone. It’s an attractive offer for lower-income customers, who are most likely to carry credit card debt, and Apple has emphasized the card’s privacy features.
For Apple, the Apple Card has accounted for only a tiny portion of its overall revenue streams. The company posted services revenue of $24.3 billion in its most recent quarter, up 12% from the prior year. Its iPhone sales have been declining since peaking in 2015, but the Apple ecosystem of hardware and software has continued to grow.
It’s unclear whether Apple will find a new partner for the Apple Card or other consumer products it offers. According to the Journal, the company has discussed handing the program to American Express, and it is also considering Synchrony Financial, which initially bid against Goldman for the credit card partnership. Both lenders have extensive ties to the technology industry and lend to a broad range of consumers.
