Visa vies for Apple Card tie-up, with both the network and issuer partnerships up for grabs

The news: Visa offered Apple approximately $100 million to become the Apple Card’s new network partner, per The Wall Street Journal.

Mastercard is the current network partner for the card program and is competing to keep the relationship, which goes until 2026. American Express is also reportedly vying for the card program, looking to become both the network and the issuer for the card.

Why it matters: The Apple Card has been in flux since 2023, when rumors began swirling that Apple and its issuing partner, Goldman Sachs, wanted to break up in part due to Goldman’s larger exit from the consumer market.

Apple reportedly sent Goldman a proposal in December 2023 to end the partnership by early 2025, but it has yet to find a replacement.

It has reportedly entered discussions with a wide range of potential partners including Capital One, American Express, JPMorgan Chase, Barclays, and Synchrony.

And now, a new dynamic is shaking up this fight, with the network relationship also up for grabs.

The bigger picture: The Apple Card will come with a string of hurdles for its new partners.

• Apple and Goldman have a nontraditional partnership, which reportedly led to costly terms for Goldman, cutting into its profits from the venture.
• The card program has also been plagued by consumer complaints and regulatory scrutiny, resulting in a fine from the Consumer Financial Protection Bureau (CFPB) in October.
• And the program’s dip into subprime lending has led to higher-than-average delinquencies and defaults.

Why networks are fighting over it: Despite potential concerns surrounding the card program, Visa, Mastercard, and American Express are all vying for the tie-up to capitalize on its large user base and wider brand presence.

• The Apple Card boasted 12 million users as of June 2024, or about 8% of the 144.3 million iOS users in 2024, per our forecast.
• The future network partner will also benefit from having close ties to Apple and is expected to stay close to Apple’s future payment efforts, per the Journal. For example, Mastercard reportedly explored using its fintech Finicity to enable users to view their account balances within the Apple ecosystem.

Our take: Visa’s high-value bid for the card program reflects the opportunity Apple Card’s new network and issuer partners will benefit from despite concerns. Losing the relationship would be a big loss for Mastercard.

But given that both the network and the issuer relationships are up in the air, extensive negotiations will likely continue, and it may be a while before the revamped card program is announced.