Goldman, Barclays Vie for GM Credit Card -- WSJ
August 13 2020 - 3:02AM
Dow Jones News
Moves are part of wider effort to wire everyday gadgets like
cars to the web
By Liz Hoffman and AnnaMaria Andriotis
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 13, 2020).
Goldman Sachs Group Inc. is seeking to acquire the credit-card
business of General Motors Co., doubling down on consumer banking
and betting on a future where people pay for gas, takeout and
groceries from the driver's seat.
The Wall Street firm is among a small number of bidders for the
auto maker's credit-card business, which has about $3 billion in
outstanding balances, according to people familiar with the
matter.
There is no guarantee that GM will ultimately choose to replace
its current card issuer, Capital One Financial Corp., or that
Goldman will win. Barclays PLC is also in the running, some of the
people said, and a decision is expected in the next few weeks.
Goldman launched its first credit card last year, partnering
with Apple Inc. and positioning it as a tech-enabled and secure
alternative to an outdated product rife with fraud. The Apple card
is digitally issued onto users' iPhones in minutes and uses
location data to categorize and track spending.
The bank agreed not to launch another co-branded card for about
another year, according to people familiar with the matter, but has
been open about its desire to add more merchants. It will have to
unseat big banks that dominate the co-brand space, including
Synchrony Financial and Citigroup Inc., whose former head of card
partnerships, Scott Young, Goldman hired in 2017 to pursue similar
deals.
Capital One has issued the GM card since 2012 and still has
about a year left on the contract.
In their pitches to GM, Goldman and Barclays have pushed the
idea of cars as e-commerce portals, people familiar with the matter
said, an effort that the auto maker itself has embraced. GM was the
first major car company to allow drivers to order food, pay for gas
and book hotel stays from dashboard touch screens, and it signed up
merchants including Dunkin' Brands Group Inc. and Shell.
It is part of a broader effort to wire everyday gadgets to the
web to encourage consumer purchases and gather data. This
technology has been slow to take hold -- not everyone needs a
refrigerator that says when the milk is running low -- but it taps
into a broader trend of consumer spending becoming more seamless
and digital. The coronavirus pandemic could add to the appeal by
increasing demand for e-commerce and contactless pickup.
The push is supported by card networks such as Visa Inc. and
Mastercard Inc., which make money when cards are swiped, virtually
or not. These companies are eager to expand shopping beyond store
checkout counters and websites.
A deal with GM would advance Goldman's ambitions on Main Street.
Since launching its consumer arm, Marcus, four years ago, the firm
has amassed $7 billion in loans and is aiming for $20 billion by
2025. Holders of the Apple Card had $2.3 billion in outstanding
balances as of June 30.
Without a well-known consumer brand or physical branches to
bring in customers, Goldman is turning to partnerships, hoping to
turn iPhone users, GM drivers, Amazon shoppers and AARP members
into Marcus customers.
In deals like the one being discussed, a new bank typically
agrees to pay a small premium to buy an existing card portfolio and
hopes to make up the money by encouraging more spending, signing up
more cardholders, and cross-selling them on other products. The
deals typically involve sharing of card interchange fees and other
revenue.
It is not unusual for merchants to shop around for new issuers,
often to negotiate a better financial arrangement. Walmart Inc.
replaced Synchrony with Capital One in 2019, and Costco Wholesale
Corp. traded American Express Co. for Citigroup in 2016.
Write to Liz Hoffman at liz.hoffman@wsj.com and AnnaMaria
Andriotis at annamaria.andriotis@wsj.com
(END) Dow Jones Newswires
August 13, 2020 02:47 ET (06:47 GMT)
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