JPMorgan Chase in deep negotiations with Apple, poised to take over Apple's credit card project from Goldman Sachs

JPMorgan Chase is in negotiations with Apple, planning to take over Apple's credit card project. On Tuesday, September 17th, Eastern Time, according to media reports, the negotiations started earlier this year and have made some progress in recent weeks, but it may still take several months to reach a final agreement. It is still uncertain whether the deal will go through, as key details such as price have not been finalized. Currently, Goldman Sachs is the issuer of Apple's credit card, but last year Goldman Sachs decided to end its cooperation with Apple in credit cards and savings accounts. Since then, Apple has been looking for new partners, contacting multiple companies including Synchrony Financial and Capital One to see if they are interested in taking over the credit card business. Goldman Sachs had also discussed similar cooperation with American Express in the past. If JPMorgan Chase and Apple reach an agreement, it will further strengthen the collaboration between the largest bank in the United States and one of the largest tech companies globally. Currently, JPMorgan Chase has taken some measures to promote cooperation with Apple. On one hand, they offer discounts to their customers when purchasing Apple products to attract them to consume Apple products; on the other hand, when many of JPMorgan Chase's credit card customers use Apple Pay, JPMorgan Chase needs to pay a certain fee to Apple. Apple needs to find a new bank to take over its credit card as Goldman Sachs decided to no longer be involved in consumer finance, and this credit card has over 12 million users. JPMorgan Chase hopes to purchase this business at a price lower than the outstanding amount of Apple's credit card project ($17 billion). Typically, the transfer price of a credit card business may be equal to or slightly higher than the loan amount, but if these accounts have a high default rate or other issues, the price will decrease. Apple's credit card project includes some high-risk customers (subprime credit), and the existing cooperation terms may bring significant costs to any bank taking over. Allison Beer, in charge at JPMorgan Chase, has been evaluating Apple's credit card project for the past few months, and JPMorgan Chase's CEO Jamie Dimon and other senior executives are aware of the progress of the negotiations. Dimon believes that tech companies are gradually becoming competitors to banks, so banks must remain flexible and consider cooperating with these tech companies. In a letter to shareholders this year, he wrote: "The banking system is not static, there are emerging banks, mergers, successful startups, fintech companies, and even Apple, which actually operates like a bank." JPMorgan Chase also wants to modify some of the provisions in the credit card project, such as Apple's current requirement for all cardholders to receive their statements at the beginning of each month. This uncommon billing arrangement has caused customer service issues for Goldman Sachs and triggered regulatory scrutiny of its consumer lending business. Goldman Sachs has tried multiple times to persuade Apple to change the billing date, and now Apple is willing to make this change for JPMorgan Chase. Goldman Sachs is facing multiple challenges as they plan to exit the consumer finance sector and try to reduce losses. Last week, Goldman Sachs revealed that it expects to incur approximately $400 million in pre-tax losses when selling the General Motors credit card business and another small business. Barclays Bank is negotiating to purchase General Motors' credit card business, but Barclays is unwilling to pay the price originally expected by Goldman Sachs, mainly because many borrowers have not repaid on time, leading to losses Goldman Sachs may face greater losses when selling the Apple credit card project. In addition, the Consumer Financial Protection Bureau (CFPB) in the United States is investigating Goldman Sachs' credit card business. This investigation began in 2022, focusing on Goldman Sachs' credit card "account management practices," including how billing errors are handled and refunds are issued to cardholders. This investigation is almost entirely focused on the Apple credit card