JPMorgan Chase in talks with Apple to take Goldman Sachs’ card

Apple is in talks with JPMorgan Chase for the bank to take over the tech giant’s flagship credit card program from Goldman Sachssaid a person with knowledge of the negotiations.

Talks are still early and key elements of a deal — such as price and whether JPMorgan will continue certain Apple Card features — have yet to be decided, said the person, who requested anonymity to discuss the nature of the potential deal. Talks could break down on those or other issues in the coming months, this person said.

But the move shows how limited Apple’s choices were when Goldman Sachs decided to move away from its ill-fated retail banking strategy. There are only a handful of card issuers in the US with the scale and appetite to take on the Apple Card program, which has challenged Goldman with losses and regulatory scrutiny.

JPMorgan is the nation’s largest credit card issuer by acquisition volume, according to the Nilson Report, an industry newsletter.

The bank is trying to pay less than face value on about $17 billion in Apple card loans because of high losses on the cards, the person familiar with the matter said. Sources close to Goldman said the higher-than-average delinquencies and defaults in the Apple Card portfolio were largely due to the fact that the users were new accounts; these losses were supposed to diminish over time.

But questions about credit quality have made the portfolio less attractive to issuers at a time when there are concerns that the US economy could be heading for a slowdown.

JPMorgan is also trying to eliminate a key Apple Card feature known as calendar-based billing, which means all customers receive their statements at the beginning of the month rather than staggered over the period, the person familiar with the matter said. The feature, while appealing to customers, means service staff are inundated with calls at the same time each month.

Apple and JPMorgan declined to comment on the negotiations, which were previously reported by the Wall Street Journal.