A new report today from CNBC looks at some of the banks Apple was in talks with for its new Apple Card before it ultimately made a deal with Goldman Sachs. The card will have a strong consumer focus, including how to help users pay down debt faster, and Citigroup allegedly passed on the deal due to its concerns about the product’s profitability.
While Barclays, J.P. Morgan Chase, Synchrony, and Citigroup all bid on the partnership, it was the latter that reportedly made it to “advanced negotiations” with Apple for the new card. However, CNBC’s sources say concerns about profitability are what killed the deal.
The Apple Card partnership ended up happening with Goldman Sachs as the company is recently putting effort into the consumer side of its financial services. Someone at a Goldman Sachs competitor reportedly gave an employee a hard time about the deal.
These profitability concerns come from Apple Card having no fees, new software features to help users pay down debt, avoid paying interest, and more. Credit card interest is big business for banks in the US, consumers spent $113 billion to service debt in 2018.
Peter Wannemacher, an analyst at Forrester also noted that financial institutions are also becoming hesitant to partner with companies that may be too cool.
Apple Card stood out as one of the most popular announcements from Apple’s March event and there seems to be a good amount of anticipation for the product, along with the optional Titanium card that will arrive with the launch.
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