Visa bids $100M to replace Mastercard as Apple’s new credit card partner

According to a Tuesday Wall Street Journal exclusive, Visa has reportedly offered Apple Inc. around $100 million to take over the tech giant’s credit card partnership from Mastercard and become the issuer behind its Apple Card. The offer comes as Goldman Sachs, which has issued the Card since its debut, pulls out of the consumer lending market.

Visa and American Express are both looking to unseat Mastercard, which has held the network role for the Apple Card since its inception. Sources familiar with the matter, cited by WSJ, revealed that Visa’s offer included the payment to make the deal enticing for Apple. 

The bidding approach is similar to one the platform used a decade ago when Costco selected its payment network to operate the retailer’s card program.

Visa competes with Amex to secure Apple Card service

Visa and American Express are both reportedly trying to take on the payment service issuer role for the Apple Card from Mastercard, but according to several reports, Goldman Sachs had insinuated earlier that they could be handing over the card to Amex in 2023. 

Mastercard is fighting to retain its place as the card’s network and has made clear it is not giving up without a fight. The company is also looking into more ways to integrate its fintech services into the Apple ecosystem, including using its Finicity platform, which connects directly to consumers’ bank accounts with permission and allows them to view balances within Apple devices.

The Apple Card represents one of the largest co-branded credit card programs in the world. Networks stand to profit as more purchase volume flows through their systems. 

According to stats from Backlinko, Apple is the center of most digital payments in the world, with over 17% of the smartphone market share. The network that secures this partnership will have to be well-aligned with the tech giant’s future payment services efforts.

Goldman Sachs bids farewell to consumer lending

Goldman Sachs, Apple’s card sponsor, started its consumer finance journey almost a decade ago with the aim of expanding its revenue sources beyond investment banking and trading. 

The bank’s decision to scale back its consumer business came late in 2022, following substantial financial losses of over $1 billion in provisions for potential bad loans.

Unconfirmed reports suggest that Goldman Sachs and Apple’s split is mutual, and the latter has offered the bank an exit from the partnership. 

The New York-based financial institution has been attempting to end its partnership with Apple since at least November 2023. Several financial institutions, including Synchrony, JPMorgan Chase, Capital One, and American Express, are now competing to become the new bank issuer of the Apple Card.

The Apple Card program holds approximately $20 billion in balances, and if a new partnership materializes, it could become one of the largest co-branded credit card deals set to change issuers

Mastercard to improve crypto payment services

Away from the bidding wars for the Apple Card, Mastercard is supposedly looking into simplifying cross-border crypto payments. The global payments giant is developing a blockchain-based network to facilitate digital currency transactions between consumers, merchants, and financial institutions. 

“We want to bring the scale and reach that we have to the space for the money to flow between the two worlds in a simple way,” said Raj Dhamodharan, Mastercard’s executive vice president of Blockchain and Digital Assets, who argued that the system will be as simple to use as Venmo.

Mastercard could use its multi-token network to help banks adopt blockchain technology for use cases such as cross-border payments and tokenizing assets like carbon credits. 

The company has also launched more than 100 crypto-oriented card programs, which reward customers with crypto instead of fiat cash-back incentives.

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