Apple Card Competition Heats Up Between Visa and American Express

The Apple Card, a financial product offered by Apple, is currently at the center of a competitive bidding war between major credit card networks. American Express and Visa are vying to take over the credit card's payment processing responsibilities from Goldman Sachs, Apple's current partner, which is seeking to divest from the agreement due to ongoing financial losses.

Goldman Sachs has been looking to exit its partnership with Apple for some time, having incurred substantial losses with the Apple Card venture. The bank has utilized the MasterCard network for transactions related to the Apple Card, which remains solely available in the United States.

According to reports from the Wall Street Journal, Visa has presented an offer of $100 million to Apple to become the exclusive payment network for the Apple Card, which is integrated with the iPhone, Apple Watch, and Mac. Simultaneously, American Express is also attempting to replace MasterCard in this capacity, leading to fierce competition between the two credit card giants.

While the bidding war suggests interest from both networks, Apple still requires a new banking partner to proceed, as Goldman Sachs cannot exit the deal without a replacement. Apple may also consider becoming its own banking entity, which would necessitate regulatory approval and could complicate its expansion plans.

Reports indicate that Apple aims to prioritize selecting a payment network before finalizing a new banking partner. American Express has indicated its capability to issue cards directly, a feature that distinguishes it from Visa and MasterCard, which typically do not engage in direct card issuance.

Goldman Sachs has reportedly engaged in preliminary discussions with American Express regarding a potential transition, although these discussions have not yet yielded a definitive agreement.

The credit card networks are particularly interested in the Apple Card due to its potential for generating significant revenue. Apple's credit card program has been noted for its consumer-friendly approach, offering lower fees compared to many competitors, although it still features relatively high-interest rates. It remains to be seen if a new banking partner will maintain the current fee structures.

Among the potential candidates to replace Goldman Sachs are JPMorgan Chase, Synchrony Financial, and Capital One, all of which have expressed interest in the partnership. Goldman Sachs had initially promised Apple a rapid international rollout of the credit card but has failed to deliver on this commitment, resulting in considerable financial setbacks.