Additional details have emerged regarding JP Morgan’s (NYSE:JPM) acquisition of the Apple Card (NASDAQ:AAPL) business.
As reported yesterday, after years of agonizing indecision over Apple’s card offering, Goldman Sachs (NYSE:GS) has now agreed to exit the business while taking a $1 billion haircut on existing credit balances estimated at around $20 billion. One of the challenges was the higher number of subprime cardholders, which led to greater write-offs of the business.
In a corporate statement, Apple said Chase, a JPMorgan subsidiary, will assume Apple Card operations, a process anticipated to take 2 years.
Chase Sapphire Reserve is a premium credit card with a $795 annual fee, offered by the bank. This card includes travel and lifestyle benefits, such as airport lounge access, travel credits, and other perks like free breakfast and property credits at luxury hotels. Sapphire Preferred is a mid-tier card that offers some travel perks and a lower annual fee.
It is not clear where the Apple Card fits alongside Chase’s other offerings, but its current structure suggests it is positioned as a more mainstream, tech-focused credit card.
Mastercard will remain the payment network for Apple Card, while cashback perks and access to a savings account will continue.
Jennifer Bailey, Apple’s vice president of Apple Pay and Apple Wallet, stated:
“Chase shares our commitment to innovation and delivering products and services that enhance consumers’ lives. We look forward to working together to continue to provide a best-in-class experience and exceptional customer service with Apple Card.”
Allison Beer, Chase’s chief executive officer of Card & Connected Commerce, said that Apple is an iconic brand and they share a commitment to supporting consumer financial health. “We’re excited to innovate together in the future.”
At least for the time being, Goldman will continue to handle the savings account offering and account approval. Green Dot manages the Apple Cash and payments service. At some point, JP Morgan will offer a new savings account, but users may choose to remain with Goldman.
WSJ.com reported that wrangling over the deal took over one year.
The Apple Card was the cornerstone of Apple’s Fintech ambitions, which at one point included investment offerings like stocks. In recent years, Apple appears to have tempered its aspirations to offer more bank-like services while enabling third-party services. Still missing from the Apple Wallet is an integrated crypto service, which should emerge in the coming years.
As for Goldman, the world’s most successful investment bank is doing fine after experiencing a rare defeat at the hands of consumer financial services. Shares of Goldman have risen by around 250% in the past five years.