iPhone maker Apple is on the verge of ending its financial partnership with Goldman Sachs. The?US banking giant, in partnership with Apple, launched Apple's?credit card and savings account.
It¡¯s been a tumultuous endeavour for Apple and Goldman, mired by delays and financial losses. They announced their first partnership in 2019 with the rollout of the Apple Card. Since then, the duo expanded into savings accounts and worked together on part of Apple¡¯s ¡°buy now, pay later¡± service.
Despite creating a unique credit card interface that had deep iPhone integration ¡ª and well-received features like fewer fees and cash back that accrues daily ¡ª the partnership quickly turned sour, as per Bloomberg.
Apple¡¯s long-anticipated breakup with Goldman Sachs Group., its main financial services partner, is now underway ¡ª with the iPhone maker offering the bank a path out of their deal.?Apple has given Goldman Sachs a proposal to end its credit card and savings account partnership within the next 12 to 15 months, a person familiar with the matter told CNBC.
Behind the scenes, there were engineering problems while developing the service. On the outside, there were complaints about gender discrimination on credit limits and approvals, as well as long customer service hold times and issues when clients disputed charges.
Between the engineering spending and losses on loans, the credit card was a disaster for Goldman¡¯s balance sheet, contributing to billions of dollars in red ink. It doesn¡¯t take a bank as well regarded as Goldman to know that it should try to ditch a program burning that much cash.?
While the next steps for both companies are not yet clear, chances are that it¡¯s going to be mostly business as usual for Apple Card users, said Ted Rossman, senior industry analyst at Bankrate. ¡°I¡¯m holding all my Apple Card payments until we figure out what the heck is going on here,¡± wrote?one X user, perhaps in jest.?
Meanwhile,?Rossman said?card users should keep paying their bills as usual, adding that?this sort of thing does happen from time to time with retailers, airlines and hotels and these co-branded kinds of cards.
From rewards programs to credit reporting, things should remain the same behind the scenes, he said.??
If Apple starts working with a new issuer, card users could notice changes in customer service procedures, Rossman said. Users might have to call a different phone number when they run into issues, and they might need to mail their payments to a different address, he added.?
Also,?if another bank takes over Apple Savings, the transition of funds to the bank shouldn¡¯t be too much of a concern for consumers, based on previous instances of other banks acquiring deposit accounts, said Ken Tumin, senior industry analyst at personal-finance platform LendingTree.
Also Read:?Explained: How?Apple?Is Becoming More Like A Bank
The bank that probably makes more sense as Apple¡¯s new partner is Chase, which already has a significant relationship with the iPhone maker.?Chase currently handles several roles for Apple, including:
-Storing some of the tech company¡¯s roughly $60 billion in cash on hand.
-Serving as one of the earliest and most successful Apple Pay partners.
-Teaming up with Apple on its Ultimate Rewards program, which offers discounts on Apple devices to its banking and credit card customers.
-And, of course, serving as one of the biggest credit card partners for transactions at Apple retail outlets, online store and the App Store.
As per the Bloomberg report, Chase has something else going for it: It offers credit cards that use the MasterCard network. That¡¯s the same system that powers the Apple Card, meaning there¡¯d be no need to switch to the Visa or American Express platforms.
Apple would also probably be keen to move its Apple Cash debit card over to Chase. That service is currently backed by Green Dot Bank, a company that¡¯s had struggles of its own ¡ª along with reliability issues. Chase already has a strong network of debit cards that the Apple Cash card could fit into, offering customers perks like ATM access.
However, the one component of Apple¡¯s financial services portfolio that wouldn¡¯t be a fit for Chase is its savings account. That product is touted as a high-yield account, with an annual rate of 4.15%. Unlike Goldman and some other banks, Chase only offers peanuts when it comes to interest for savings accounts. So, assuming Chase won¡¯t get into high-yield accounts to secure a deal with Apple, there will need to be another solution for that product.
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