Following many months of speculation, Apple has accepted JP Morgan Chase as the new issuer of Apple Card, replacing Goldman Sachs. 

Apple has been on the hunt for a replacement card issuer ever since Goldman Sachs decided to abandon its push into retail banking. American Express, Synchrony Financial, and Capital One all expressed some interest in reaching the deal, but Chase took the prize. 

Chase will become the new card issuer with the transition to the new arrangement expected to take around 24 months. Apple Card will continue to work as it already does in the meantime. Some things don’t change. While Chase replaces Goldman Sachs as card issuer, Mastercard will continue to act as the payment processor for the card.

‘Shared commitment’ for future of Apple Card

From a highly enthusiastic start, Goldman Sachs seems to have become a less enthusiastic partner since deciding to abandon the retail banking market. This has likely prevented Apple from extending the card into new markets and building additional services for its financial product.

Jennifer Bailey, Apple’s vice president of Apple Pay and Apple Wallet, could be construed as having high hopes for the future, based on her Apple statement (italics mine): “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.”

“We’re excited to innovate together in the future,” said Allison Beer, Chase’s chief executive officer of Card & Connected Commerce.

Perhaps the biggest hint of expansive plans came from Mastercards’s president of the Americas, Linda Kirkpatrick, who said: “Innovation on Apple Card has taken the consumer payments experience to the next level, and we look forward to delivering simple, secure, and seamless payments at global scale.”

More challenging than before

The latter statement suggests an intention to make the service available more widely, though it’s possible the opportunity has already passed. Challenger banks are much more entrenched outside the US, even as international tension dents America’s singular brand appeal.

If you think back to the well storied launch of Apple Card, the world was quite different. At that time, the full impact of conflict and energy prices hadn’t struck and economies were in better shape. Apple hit that market with a cutting-edge financial product that attracted glowing praise from across consumers and the banking retail markets. JD Power’s vice president of banking and credit card services, Jim Miller, pointed out the opportunity that could be unlocked in emerging economies, where many were far more already accustomed to mobile banking services.

At the time of launch, Megan Caywood, Barclays’ global head of digital strategy, wrote, “Love seeing Apple nail the challenger bank playbook. It was recognized as the best US credit card by JD Power in 2021.

Unfortunately, early stumbles on the part of the new service, along with the decision to leave retail banking, put a brake on any plans that might have existed for a fast rollout of additional services, and the environment has changed.

That’s not necessarily a problem, given Apple’s vast brand appeal and the positive response its credit card service has already achieved. It is important to note that Chase is primarily a US consumer bank, which suggests the dream of an internationally available Appe Card could remain just that. 

What about the detail?

The deal ends years of speculation concerning the future of Apple’s $20 billion credit card portfolio. But getting there will take some time, with JP Morgan Chase putting aside $2.2 billion for potential credit losses during the move.

Goldman Sachs is also feeling some pain, taking a $1 billion loss on outstanding credit balances as part of the move. The truth seems to be that while Apple did attract lots of high-value customers — a 2020 survey claimed a third of Apple Card customers had annual incomes above $100,000 — it also attracted a hefty number of lower-income users and had user delinquency rates around 4%. (The industry average is 3.05%).

JP Morgan will also launch a new Apple savings account, though existing savers will be able to remain at Chase if they like.

Apple says the service will remain as it is, for now. That means no fees, 3% daily cash back, and useful tools such as Apple Card Family, installment payments, and savings. More information for existing Apple Card users is available here. The transition to Chase is subject to closing conditions and regulatory approvals, Apple confirmed.

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