NEW YORK: Tech giant Apple and Goldman Sachs, the investment bank, are reported to be developing plans to launch a new joint credit card, which would enable both firms to extend their services beyond core business activities.

The new credit card is expected to be branded Apple Pay and could be introduced as early as next year, the Wall Street Journal reported, citing people “familiar with the matter”.

According to the Journal’s sources, Apple will replace its longstanding rewards card deal with London-based Barclays and – although unconfirmed – may continue to use the Visa network for the new card.

Apple, faced with slowing sales growth of its iPhone, has taken tentative steps into consumer banking as well as other areas, such as music streaming, and the new card is expected to boost its presence in the banking sector.

By partnering with Goldman Sachs, Apple has an opportunity to raise Apple Pay’s profile, especially if Goldman can offer in-store loans to customers buying iPhones and other devices.

The company also stands to boost its revenue by collecting payments from Goldman for each new cardholder, the Journal’s sources said, especially as these payments can exceed $100 per account.

In addition, Apple might be able to double its take from mobile payments if the new card is used for purchases – the company currently receives 0.15% per transaction under its current arrangement.

As for Goldman Sachs, the partnership would help the Wall Street firm to diversify into retail banking and reduce its dependence on its traditional business model.

The company launched Marcus, an online consumer bank, in 2016 and just last month acquired Clarity Money, a personal finance app, but a tie-up with Apple would significantly extend its reach.

As explained by Jaime Toplin of Business Insider: “Marketing with Apple could be an easy way to spread recognition of its offerings and pick up new customers, especially if the program offers a strong rewards proposition – the top reason customers choose credit cards.”

Sourced from Wall Street Journal, Business Insider; additional content by WARC staff