Can I Add My Capital One Card To Apple Pay Before It Arrives

 

Can I Add My Capital One Card To Apple Pay Before It Arrives

Goldman Sachs, the current issuer behind the Apple Card, has openly stated that the Apple Card has been a significant money-losing venture. While they haven't specified the exact losses attributed solely to the Apple Card versus their other operations, it appears that the losses might have reached around $1 billion in the past year and possibly as much as $3 billion since 2020. The situation has become so dire that the Federal Reserve is investigating their consumer card business.

In response to the financial challenges, Goldman Sachs is restructuring its business, and one major casualty appears to be the retail lending division, known as the Marcus division. The division may be split up, with some parts eliminated entirely, and certain products might be offered exclusively to high net worth individuals. The co-brand credit card, including the Apple Card and other loan products, could form a separate division.

Despite the losses, Goldman Sachs extended its contract with Apple for the Apple Card until 2029. However, recent developments suggest that Goldman Sachs is seeking a way out of the Apple Card partnership. It is possible that there is an escape clause in their contract, allowing Goldman Sachs to exit by paying a certain sum of money. Even if they have to pay a significant amount, it might be a worthwhile move considering the substantial yearly losses.

If Goldman Sachs does disengage from the Apple Card, Capital One is speculated to be a potential candidate to take over. While the Apple Card has been unprofitable for Goldman Sachs, it doesn't necessarily mean it would be the same for other card issuers. When Apple launched the card, Goldman Sachs was eager to enter consumer lending and, as a result, may have been more lenient in approving applicants, including subprime or near-prime customers.

However, if Apple is searching for a new partner, they might not find one willing to grant the same level of concessions that Goldman Sachs did. Capital One could be an attractive option due to its experience in working with consumers with varying credit profiles, including those with slightly shaky credit histories. Capital One also has a track record of managing credit card operations for large retailers like Walmart, Kohl's, and Cabela's.

Other potential candidates seem less likely, as they may be unwilling to take on the perceived risk of the Apple Card, especially after witnessing Goldman Sachs' struggles. Synchrony Bank, another possible candidate, lost the Walmart business to Capital One partially due to the number of approvals given for Walmart credit cards.

Considering these factors, Capital One could become the issuing bank for the Apple Card by 2024, assuming Goldman Sachs terminates its partnership. However, this prediction remains speculative, and other factors may come into play. It will be interesting to observe how the situation unfolds.

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