The WSJ reported that Visa is considering a $100 million bid to shift the Apple Card’s network alignment from Mastercard to Visa. While this change will not help Goldman Sachs navigate its way out of its troubled consumer lending issue—which Goldman announced it wanted to shutter back in 2022—the deal illustrates the importance of Apple’s payment technologies.
Apple’s Tech Is Different from Goldman Sachs’ Loan Book
Goldman’s loan portfolio has had its warts. High charge-offs were an issue with the GM co-brand when Barclaycard took over the receivables. Prior to that, the business was run effectively by Capital One, but at Goldman, it saw skyrocketing 10% loss rates. Goldman bought lender GreenSky for $1.7 billion but sold it for half that amount. The Apple portfolio has been on the market, with a handful of top issuers that could absorb the portfolio, but only with rumored interest, despite the $20 billion receivable potentially being discounted by more than $1 billion.
But the Apple technology is what is interesting today. Whether Mastercard ups the ante or not, it illustrates the importance of the wallet and the smooth integration into the mobile device we all know and love. In payments, where transaction volume is key to revenue generation, the tech takes a slice of the processing fee. With some market upsets on the horizon as the Capital One/Discover merger moves along, Visa’s play is aggressive and can add cache to the dominant U.S. credit network.
The Tech Sale Will Not Fix the Credit Card Problem
Goldman reported that its loan loss provisions for Q4 2024 were $341 million, bringing the total for 2024 to $1.348 billion, a 31% increase from 2023. With the economy’s current stress, any portfolio buyer will need to consider the sensitivity to strained budgets and the uncertainty of a recession. (See the latest on credit risk: Seven Credit Card Warning Signs in 2025: Don’t Stop Lending, but Watch Out | Javelin). However, there are still other issues to consider.
Some operational issues extend beyond the tech purchase, affecting total operating expenses. Experienced lenders, such as American Express, Chase, and Synchrony, each of which has been identified as a prospective buyer for the credit-stressed portfolio, understand how to reduce costs and mitigate risk. Issuing expensive metal cards was a cool idea at the time because they are neat, but does a portfolio that drives transactions to a wallet really need to incur the cost? It adds up when receivables have more than a million accounts.
And billing? Innovative issuers will need to fix the fact that all Apple cards bill on the first of the month, which creates call center havoc, rather than the practical 20 billing cycles most banks use to load balance statement rendition and call center volume.
What’s Next
If Visa is considering an offer, you can be confident that Mastercard is appraising its future interest. For both firms, which are top global payment technology companies, Apple is a plum client. For Apple, $100 million is a significant amount of money, but with $53.8 billion in cash on hand and a market cap of $3.4 trillion, it won’t move the needle. The big question remains: how do you put the $20 billion Apple receivable into the hands of a top lender that can generate a profit from the extensive portfolio? And the next question becomes will the Apple credit card standards get tightened, redefining their 1984 Macintosh tagline “…for the rest of us.”
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