Goldman Sachs, General Motors, and Mastercard Partner To Develop Rewards-Based Credit Cards

The Goldman Sachs Group, Inc. and General Motors Co., along with Mastercard, announced the formation of a multi-year partnership to develop new and innovative credit card products that will change the landscape of the credit card business. Let’s take a look at what the companies have in mind. 

Goldman Sachs entered into the credit card business after it partneredOpens a new window with Apple for the Apple Card in August 2019. The credit card launch event has been Goldman’s most successful one so far. The Apple card was designed to help consumers lead a healthier financial life, as it primarily aimed to revolutionize the credit card experience for its customers.

Now, the bank has announcedOpens a new window a new partnership with General Motors (GM) and Mastercard to develop innovative credit card products. In October 2020, Goldman had agreed to acquire GM’s credit card business for $2.5 billion. However, the recently-announced partnership hints towards Goldman’s plans to expand the banking card business beyond simply acquiring the existing card accounts.

The move could help Goldman develop a stronger base in the consumer banking arena. Currently, the GM credit card is issued by Capital One and has 1+ million cardholders whose yearly expenditure is about $8.5 billion. At the end of the third quarter of 2020, the Apple Card had a total of $3 billion in loan balances. If we compare the numeric figures of these two cards, it is evident that Goldman’s credit card business will boost with the newly announced partnership.

The collaboration will provide Goldman Sachs an established base of more than 1 million customers. This will allow the company to cross-sell other financial products, including Marcus personal loans or profitable savings accounts to these customers. The development may also encourage consumers to spend more as the deal involves rewards-based GM credit card products.

As per the norms of this partnership, Goldman Sachs will act as an issuing bank for GM’s credit card programs, and Goldman Sachs is expected to start issuing GM-branded credit cards by September 2021. In this multi-year relationship, Mastercard will remain the network of choice for credit card offerings. The credit card accounts of the current cardmembers will see no changes before this time. 

Omer Ismail, Goldman Sachs global head of consumer business, was highly optimistic about the strategic partnership program of Goldman Sachs. “We are excited to partner with GM to reimagine the credit card experience for GM customers. Our focus remains on delivering a simple and transparent experience that helps customers manage their spending and borrowing needs better.”

Goldman Sachs To Power Digital Checking Accounts

Goldman Sachs Group Inc. is slated to offer checking accounts for main street consumers as it partnersOpens a new window with payment unicorn Marqeta to expand and explore digital checking accounts for Marcus, a brand of Goldman Sachs Bank USA. 

As per a statement given on Thursday, the Wall Street giant plans to work with Marqeta on the offering, which will roll out in the latter half of 2021. According to Jason Gardner, Marqeta’s chief executive officer, Goldman plans to utilize Marqeta’s technology to issue debit cards into mobile wallets. He opines that the company plans to invest in offerings that will allow customers to have real-time access to their spending data.

“What’s interesting about Goldman Sachs is that they’re a very storied, longstanding bank, and they’ve come out with Marcus, who has done well in a relatively short period of time,” Gardner said. “This is just another true validation of our technology.”

The new digital checking accounts are expected to be introduced to customers later in 2021.

According to Marqeta’s blog postOpens a new window , Goldman Sachs “will leverage their modern card issuing platform” to introduce digital checking accounts to Marcus customers. The partnership will expand the Marcus consumer portfolio of digital-first banking initiatives, including fixed-rate personal loans, high-yield online savings accounts, certificates of deposit, and other services. 

Marqeta is a California-based card-issuing platform that provides infrastructure and tools for developing and streamlining payment solutions. The company was founded in 2010 with the aim of disrupting the payments ecosystem and consequently supporting the “digital builders of the world to build industry game-changers.”

The firm recently entered into a series of partnerships, including a deal with buy now, pay later (BNPL) firm Afterpay, and a global collaborationOpens a new window with Mastercard. The international expansion of Marqeta is handled and accelerated by Mastercard under this global collaboration. Besides, Marqeta is also planning to file for an initial public offering (IPO) in 2021 on a $10 billion valuation. Marqeta also teamed up with Uber in November 2020 to power its global cards and payments infrastructure.

In Conclusion

The Goldman Sachs Group, Inc., General Motors Co., and Mastercard teamed up to form a long term partnership for developing co-branded rewards-based credit cards. Only time will tell what kind of impact the addition of GM’s credit cards has on Goldman’s consumer lending business. But the partnership could well serve as a major growth catalyst for the credit card business.

Goldman Sachs entered into another partnership with Marqeta to create checking accounts. This inclusion of digital checking will help Marcus of Goldman Sachs expand its consumer portfolio of digital-first banking initiatives.

Do you think this partnership will change the fundamentals of the credit card business? Comment below or let us know on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to hear from you!