Visa and American Express in Competition for Apple Card
Financial titans Visa and American Express (Amex) are currently in pursuit of a prime opportunity: transitioning to become the new home for the Apple Card. According to reports from The Wall Street Journal, Visa is prepared to offer roughly $100 million upfront to take over as the payment network for Apple’s credit card.
The Background of Apple Card
Launched in 2019 during a notable event that highlighted various digital services like Apple TV+, Apple News+, and Apple Arcade, the Apple Card was initially backed by Goldman Sachs and utilized Mastercard as its payment network. This innovative credit card aimed to provide users with a unique and integrated experience in managing their finances.
Shifting Partnerships and Future Directions
As Apple and Goldman Sachs explore dissolving their partnership, the shake-up signals a shift in both companies’ strategies, especially as Goldman Sachs has expressed a desire to exit the personal banking sector. The bank has reportedly faced significant losses, amounting to $3 billion, leading it to consider transferring the Apple Card operations to American Express.
In the ongoing transition, Apple must secure both an issuing bank and a payment network for the Apple Card. Apart from American Express, both JPMorgan Chase and Synchrony Financial have emerged as potential contenders to inherit the Apple Card from Goldman Sachs.
American Express’s Ambitious Bid
American Express is not just eyeing the role of the payment network but seeks to become the issuer of the Apple Card as well. Meanwhile, Mastercard, the current payment network operator, is making efforts to retain its place in the Apple Card ecosystem.
Attractive Features of Apple Card
One of the standout features of the Apple Card is its lack of traditional fees, including annual, over-the-limit, foreign transaction, and late fees. The card also provides consumers with valuable tools aimed at minimizing interest costs and offering various percentages of daily cash back on purchases.
A Growing User Base and Controversies
Associating with the Apple Card represents an undeniable opportunity, especially given that it boasts over 12 million users in the U. S.as of last year. Despite active efforts by Apple and Goldman Sachs to broaden the card’s reach, the journey has not been without its challenges.
Notably, the Apple Card faced accusations of gender discrimination following reports that male users were often granted significantly higher credit limits compared to their female counterparts, including prominent cases like that of Apple co-founder Steve Wozniak.
Additionally, the U. S.Consumer Financial Protection Bureau (CFPB) mandated that Apple and Goldman Sachs pay a hefty $89 million in fines due to shortcomings in customer service and misleading information regarding interest-free payment plans for Apple products.
Source: The Wall Street Journal
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