In a surprising turn of events, Apple has decided to wrap up its credit card partnership with Goldman Sachs over the next 12–15 months.
The collaboration, which began with much excitement in 2019, was initially positioned as a unique offering— a credit card not tied to a traditional bank. This development marks a setback for Goldman, which had strategically invested in consumer credit initiatives.
Despite an earlier announcement in October 2022 that the Apple-Goldman partnership would extend until 2029, challenges emerged. Goldman reportedly faced difficulties in managing the extensive consumer credit program and explored the possibility of transferring it to other entities, including American Express.
This move follows Goldman's recent decision to discontinue its credit card partnership with General Motors. The bank has faced financial challenges, having reported a $3 billion loss in consumer banking since 2020, largely attributed to funds set aside for covering consumer loans that did not materialize.
David Solomon, Goldman's chairman and CEO, acknowledged the need for a strategic reassessment in early 2022, citing the adverse impact on execution resulting from overcommitment.
For Apple, this break in partnership poses a hurdle in its pursuit of expanding service revenue, especially as product sales have experienced a 1% decline over the past year. In contrast, service revenue witnessed a robust 16% growth during the same period.
While Apple is anticipated to pursue a new credit deal, the identity of its potential banking partner remains undisclosed.
