Home Latest Insights | News Visa Makes $100m Bid to Replace Mastercard as the Payment Network for the Apple Credit Card

Visa Makes $100m Bid to Replace Mastercard as the Payment Network for the Apple Credit Card

Visa Makes $100m Bid to Replace Mastercard as the Payment Network for the Apple Credit Card

Visa has offered Apple Inc. approximately $100 million to replace Mastercard Inc. as the payment network for the Apple Credit Card, the Wall Street Journal reported.

This bid is part of a broader competition among major payment networks, including American Express, to secure a partnership with Apple as Goldman Sachs, the current issuer, exits its consumer lending business. The Apple Credit Card, launched in 2019 with Mastercard as its network and Goldman Sachs as its issuer, represents a significant opportunity due to its $20 billion in customer balances and over 12 million users in the United States.

Background

The Apple Credit Card was a collaboration between Apple, Goldman Sachs, and Mastercard. It aimed to deepen customer loyalty and generate revenue through transaction fees and high-yield savings accounts. However, Goldman Sachs’ foray into consumer lending has proven unprofitable, with its platform solutions unit, which includes the Apple Card, reporting an $859 million net loss in 2024.

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This financial strain, coupled with operational challenges, such as an $89 million fine from the Consumer Financial Protection Bureau in late 2024 for poor customer service and unclear terms, prompted Goldman Sachs to seek an exit from the partnership, originally set to run until 2030.

As Goldman Sachs withdraws, Apple is seeking both a new issuer and a payment network. Major banks like JPMorgan Chase, Synchrony Financial, and Barclays have been in talks to replace Goldman Sachs, while Visa, Mastercard, and American Express vie for the network role. Apple is expected to select a network before finalizing an issuer, amplifying the stakes in this contest.

Visa’s $100 Million Bid

Visa, the world’s largest payment network, has made an aggressive move by offering Apple $100 million upfront to switch the Apple Card from Mastercard. This payment is atypical for payment networks, which typically earn revenue through transaction fees rather than large initial payouts.

However, the Apple Card’s scale, $35 billion in annual transaction volume, and $20 billion in balances make it a lucrative prize. Visa’s bid reflects its strategy to secure a foothold in Apple’s ecosystem, particularly given Apple Pay’s prominence and the potential for future payment innovations.

Visa’s strategic implications include winning the Apple Card to bolster its transaction volume and strengthen its relationship with Apple, a key player in mobile payments. Visa’s advanced tokenization technology and extensive issuer partnerships give it a competitive edge over rivals like American Express, which operates as both a network and issuer but has less universal acceptance.

In terms of stock performance context, as of April 7, 2025, Visa’s stock price stands at $301.282, down 14% from $350.0 on March 27. This decline may reflect market uncertainty about the bid’s outcome or broader economic pressures, but a successful deal could reverse this trend by signaling growth potential.

Mastercard’s Position

Mastercard, the incumbent network, is “fiercely” defending its role, according to The WSJ. With the Apple Card currently processing transactions over its rails, Mastercard benefits from its $35 billion annual volume. Losing this partnership with Visa or American Express would dent its market share and prestige, particularly in the high-profile fintech space.

The financial stakes for Mastercard show its stock has fallen 15% from $557.57 on March 27 to $473.18 on April 7, 2025. The potential loss of the Apple Card could exacerbate this decline, though Mastercard’s global dominance and diversified revenue streams provide resilience. Retention efforts remain undisclosed in specifics, but Mastercard’s actions likely include competitive fee structures or enhanced technological offerings to retain Apple’s business.

American Express Dual Bid

American Express is pursuing an ambitious strategy by seeking to serve as both the payment network and issuer for the Apple Card. This dual role leverages Amex’s integrated business model, distinguishing it from Visa and Mastercard, which rely on third-party issuers. Amex previously explored taking over the card from Goldman Sachs in 2023, indicating long-term interest.

Advantages and challenges for Amex include its premium brand and rewards programs aligning with Apple’s customer base, but its smaller network, less widely accepted globally than Visa or Mastercard—could limit its appeal. A shift to Amex might also disrupt the card’s seamless integration with Apple Pay, a critical feature for users. Market impact shows Amex’s stock has dropped 16% from $270.8995 on March 27 to $226.325 on April 7, 2025.

Securing the Apple Card could boost its valuation, though the upfront costs of replacing Goldman Sachs (estimated to be significant due to the portfolio’s $20 billion in balances) pose a risk.

Goldman Sachs’ Exit and Investor Pushback

Goldman Sachs’ decision to exit consumer lending stems from mounting losses and strategic missteps. CEO David Solomon noted that the Apple Card reduced the bank’s equity return by 75 to 100 basis points in 2024, though he anticipates improvement in 2025 and 2026 as the unwind progresses. JPMorgan Chase is a leading contender to replace Goldman Sachs as the issuer, having been in talks with Apple since 2024.

Shareholder concerns are evident as Institutional Shareholder Services (ISS) and another proxy advisor have urged Goldman Sachs investors to reject a proposed $160 million stock award for Solomon and COO John Waldron, citing its lack of performance-based criteria.

Solomon’s 2024 compensation of $39 million and an $80 million retention bonus (vesting over five years) have fueled criticism, especially given the consumer banking setbacks. Stock movement for JPMorgan Chase has declined 18% from $248.12 on March 27 to $202.263 on April 7, 2025, reflecting broader sector pressures.

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