JPMorgan Chase has reportedly entered advanced negotiations to take over the Apple Card programme from Goldman Sachs.
According to Yahoo Finance, Apple is understood to have indicated a preference for JPMorgan to become the new issuer, though no agreement has been signed, and negotiations remain subject to unresolved issues.
The Apple Card programme currently carries approximately USD 20 billion in balances under Goldman Sachs. Sources familiar with the matter have said talks between Apple and JPMorgan have been ongoing since early 2023, though efforts to transition the card away from Goldman began even earlier. Other potential partners considered over the past two years included large credit card issuers such as American Express, Capital One, and Synchrony Financial, as well as several fintech firms and private credit providers.
High subprime exposure poses a key risk
One of the central challenges in completing the transfer is the credit quality of Apple Card’s portfolio. Approximately 34% of Goldman’s credit-card balances as of March were tied to borrowers with credit scores below 660, classified as subprime. By contrast, JPMorgan’s own subprime exposure stands at around 15%. Capital One, which has long operated in the subprime space, holds 31% of its balances in that category.
The relatively high delinquency rate on Goldman’s credit card accounts has also contributed to hesitancy. As of the end of March, around 4% of balances were at least 30 days overdue, compared to a 3.05% average across commercial banks, based on Federal Reserve data. Goldman had set aside USD 2.45 billion to cover potential credit card losses by the end of the first quarter, according to MSN.
In addition to credit risks, the Apple Card’s structure presents profitability constraints. The programme does not charge late fees, a typical revenue stream for card issuers managing higher-risk portfolios. This design has made it less attractive to some potential partners, unless acquired at a substantial discount.
Separately, a competition between card networks has unfolded in the background. MSN reports that Visa has offered Apple a payment of about USD 100 million to displace Mastercard as the card’s network provider, though no decision has been announced.
