Apple CEO Tim Cook introduces the Apple Card during a launch event at Apple headquarters in Cupertino, California, March 25, 2019.
Noah Berger | AFP | Getty Images
Apple is in talks with JPMorgan Chase for the bank to take over the tech giant's flagship credit card program Goldman Sachssaid a person with knowledge of the negotiations.
Talks are still in the early stages and key elements of a deal, such as price and whether JPMorgan will keep certain features of the Apple Card, are still to be decided, said the person, who requested anonymity to discuss the nature of the potential deal. Talks could break down over these or other issues in the coming months, the person said.
But the decision shows how limited Apple's options were when Goldman Sachs decided to pivot from its ill-fated retail banking strategy. There are only a few card issuers in the U.S. with the scale and appetite to take over the Apple Card program, which had saddled Goldman with losses and regulatory scrutiny.
JPMorgan is the nation's largest credit card issuer by purchase volume, according to the Nilson Report, an industry newsletter.
The bank is seeking to pay less than the face value of the roughly $17 billion in Apple Card loans because of high losses on the cards, the person familiar with the matter said. Sources close to Goldman argued that higher-than-average delinquencies and defaults on the Apple Card portfolio were largely due to users being new accounts. Those losses were supposed to ease over time.
But doubts about credit quality have made the portfolio less attractive to issuers at a time when there are concerns that the US economy could be heading for a slowdown.
JPMorgan is also seeking to eliminate a key feature of the Apple Card known as calendar-based billing, meaning all customers receive statements at the beginning of the month rather than staggered over the period, the person familiar with the matter said. The feature, while appealing to customers, means service staff are inundated with calls at the same time every month.
Apple and JPMorgan declined to comment on the talks, which were previously reported by The Wall Street Journal.
