Following reports that Goldman Sachs and Apple might be about to part ways over the pair's Apple Card credit card, one potential card issuer seems to be pulling back amid rumors it could step in. You might think that the reason for that would be reports that Goldman Sachs has lost more than $1 billion since the card launched, but that might not be it at all.
With some analysts in the finance space pointing the finger squarely at Amex as a potential suitor for an Apple Card deal, it was surely only a matter of time before someone put the question to the company itself. But when that happened Amex CEO Steve Squeri was suitably coy, but that doesn't mean that he didn't have anything interesting to say. Because he very much did, and it makes for bad reading for Apple.
Squeri was speaking at a Goldman Sachs U.S. Financial Services Conference in New York, and while the irony of the event's name surely wasn't lost on him, Squeri was quick to suggest that perhaps Amex and Apple aren't all that good a partnership as some might expect — because Amex sees itself as a premium card.
The premium card base
According to a Payments Dive report, the Amex CEO was asked about the rumors that his company was keen to pick up where Goldman Sachs looks set to leave off. However, Squeri says that the biggest hurdle that Amex has when choosing a partner is its premium leanings and that the partners it works with need to have a similar approach. "Sometimes the partner wants to reach into everybody, and that’s just not who we are,” he reportedly said.
Squeri went on to give some examples, hinting that partnerships with Delta Air Lines, British Airways, and hotel companies like Hilton and Marriott align more with the Amex brand than some others. "There are others that we’ve walked away from, or not engaged with, because of the breadth of their customer base," he added.
That could of course be a big problem for Apple and any chance of Amex taking on the Apple Card. While Apple does skew to the higher end of the market with devices that are more costly than some of those offered by the competition — the Vision Pro's $3,499 asking price is a great example — it does still see itself as a company that offers something for everyone. The iPhone SE is an example of that, as is the Apple Watch SE. Does that marry with the way Amex sees itself?
Analysts seem to think so. Keefe, Bruyette & Woods analyst Sanjay Sakhrani has already suggested that Amex could be a good place for Apple Card to land, and he isn't alone. But with Amex more firmly entrenched at the premium end of the credit card market than ever before, the company might disagree.
The cost is too high
Another reason Amex might balk at the Apple Card is how much it costs.
"Because Amex’s product mix today includes more premium offerings than it did pre-pandemic, the company’s credit metrics have benefited," Payments Dive reports executives as having said previously. "Amex has seen a slower pace of normalization in delinquencies and charge-offs than many of its peers." Put that against reports of just how much Apple Card cost Goldman Sachs to keep running and it's easy to see why Amex might want to run as far and as fast as it can in the opposite direction.
As for who will ultimately take over the Apple Card remains to be seen. And whether that will finally see a global launch is another matter entirely.
