Apple approaches Goldman Sachs to wind down card partnership

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Apple has proposed winding down its credit card and savings account partnership with Goldman Sachs sooner than planned.

A term sheet offered by Apple would create an option to end the current multiyear contract in the next 12 to 15 months, according to people familiar with the matter. The term sheet would only go into effect if the iPhone maker is able to find an alternative provider for the two services.

The Wall Street Journal first reported the move. Goldman said in February it would explore “strategic alternatives” for its consumer platform, including credit cards. Long known for its prowess in investment banking, the group is now seeking to balance that highly cyclical business by growing its asset and wealth management arm.

Apple and Goldman launched the credit card for US consumers in August 2019, promising a “new level of privacy and security” that would differentiate it from others on the market.

Apple’s savings account, also serviced by Goldman, was launched this year, offering 4.15 per cent annual interest, well ahead of the average rate on US savings accounts at the time. The tech company in August said the service had exceeded $10bn in deposits.

The two product launches marked a push by Apple to shake up the financial services space, in a direct challenge to the biggest Wall Street banks. The technology group has a long history of partnering with other companies until it has sufficient expertise to go it alone — such as the transition away from Intel processors to in-house-designed chips in Mac computers.

Apple is looking to generate more value from the millions of users of its devices by expanding its service offerings. Its credit card is built into its tap-to-pay wallet service, Apple Pay. More than 75 per cent of iPhone owners already use Apple Pay.

Its partnership with Goldman got off to a bumpy start as the two bumped heads over advertising for the product. Apple wanted to market the card as “the most secure credit card ever”, but cooler heads at the bank warned that superlatives would open the product up to lawsuits.

The iPhone maker would not confirm the move but said in a statement: “The award-winning Apple Card has seen a great reception from consumers, and we will continue to innovate and deliver the best tools and services for them.”

Goldman declined to comment.