Apple Explores Customer Financing With Goldman

Goldman Sachs and Apple are reportedly in talks about the former providing financing to the latter’s customers, particularly those who want to purchase a new iPhone, iPad or other Apple devices.

According to a report in the Wall Street Journal, people familiar with the matter said talks are still ongoing and may not result in a deal. If an agreement should result from the discussions, though, it would help Goldman Sachs enhance both its consumer bank and its consumer-focused online lending platform, Marcus.

The same sources noted that, in addition to its online lending platform and consumer bank, Goldman Sachs is creating a point of sale business that would give consumers loans when checking out at retailers or online. If the finance company becomes Apple’s financing partner, it could be a way for the firm to grow that business.

Goldman Sachs would face competition in that area of the market, however. FinTech startups Affirm and GreenSky are already in the space and, according to the WSJ, have both raised approximately $200 million in the past few weeks as they gear up for their respective expansions.

The talks between Apple and Goldman Sachs are focused on providing financing for an upgrade program similar to what the tech company launched in 2015 with Citizens Financial Group. Under that program, consumers gained access to interest-free loans from Citizens for iPhone upgrades, and those wanting to purchase other items would pay interest on the loan.  

It is unclear if Goldman would replace Citizens Financial Group or if a new upgrade financing program would be created. Either way, an upgrade program for Apple products has become much more important given the rising prices of its iPhone products.

The iPhone X started out at an asking price of $999, and there have been concerns in the market that consumers can’t afford the device. They also do not appear to have the appetite to pay that much for a smartphone. By being able to finance it, however, the payment burden will be spread out over several months, potentially making the purchase more palatable for consumers.