JPMorgan Chase in talks with Apple about buying Goldman Sachs card

Apple CEO Tim Cook introduces the Apple Card during a launch event on March 25, 2019 at Apple headquarters in Cupertino, California.

Noah Berger | AFP |

Apple is in talks with JPMorgan Chase for the bank to take over the technology giant’s flagship credit card program from Goldman Sachssaid a person familiar with the negotiations.

Talks are still in the early stages and key elements of a deal – such as price and whether JPMorgan would retain certain features of the Apple Card – have yet to be decided, said the person, who asked not to be identified to discuss the nature of the potential deal. Talks could break down over these or other issues in the coming months, this person said.

But the move shows how limited Apple's options were when Goldman Sachs decided to abandon its ill-fated retail banking strategy. There are few credit card issuers in the U.S. with the scale and appetite to take on the Apple Card program, which has saddled Goldman with losses and regulatory scrutiny.

According to the industry newsletter “Nilson Report,” JPMorgan is the largest credit card issuer in the country measured by purchase volume.

The bank wants to pay less than face value for the roughly $17 billion in loans on Apple Card because losses on the cards are high, the person familiar with the matter said. Sources close to Goldman argued that the higher-than-average delinquencies and defaults in the Apple Card portfolio are mainly due to the fact that the users are new accounts, and those losses should subside over time.

But questions about credit quality have made the portfolio less attractive to issuers at a time when there are concerns that the U.S. economy could be heading for a slowdown.

JPMorgan also wants to eliminate a key feature of Apple Card called calendar-based billing, which means all customers receive their statements at the beginning of the month rather than spread out over the entire period, said the person familiar with the matter. While that feature is attractive to customers, it results in service staff being inundated with calls at the same time every month.

Apple and JPMorgan declined to comment on the negotiations, which were previously reported by the Wall Street Journal.

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