JPMorgan Chase & Co. (JPM) is eyeing a significant opportunity in the financial technology space, as the banking giant is in talks to become the new issuer of the popular Apple Inc. (AAPL) credit card. This potential partnership could mark a major shift in the landscape of financial services, bringing together two of the world’s most recognizable companies.
According to a report from the Wall Street Journal, JPMorgan has been engaging in discussions with Apple about taking over its credit card program. These conversations began earlier this year and have intensified in recent weeks. Currently, Goldman Sachs Group Inc. (GS) holds the position of card issuer, but Apple and Goldman decided to part ways last year on their partnership, which also included credit cards and savings accounts.
Since then, Apple has been exploring various options, speaking with several potential suitors, including Synchrony Financial, Capital One, and American Express. A successful deal with JPMorgan would solidify Apple’s connection with the banking giant. JPMorgan already offers deals on Apple products to Chase customers and receives payments from Apple when its credit card customers use Apple Pay.
However, JPMorgan is reportedly seeking concessions from Apple, and a final agreement could still be months away. Key details, such as the price of the potential transaction, remain under negotiation. Another crucial aspect to consider is that when a credit card partnership transitions, there typically needs to be an agreement between the existing bank and the new issuer. With approximately $17 billion in outstanding balances in the Apple Card program, sources familiar with the matter have revealed that JPMorgan is looking to pay less than the face value of these balances.
Allison Beer, CEO of Chase’s credit card and connected commerce business, has been diligently evaluating the current value of the Apple program in recent months. High-level executives, including Jamie Dimon, have also been kept informed about the ongoing negotiations. In his letter to shareholders this year, Dimon acknowledged the dynamic nature of the banking system, highlighting the emergence of new players, mergers, and the rise of fintech companies, including Apple, which effectively operates as a bank.
At the time of writing, JPMorgan shares were up 0.38% at $208.65, while Apple shares were down 0.32% at $215.64, according to Benzinga Pro.
