Goldman Sachs is taking another step into the retail finance world, engaging in talks to partner with JetBlue on its credit card program. The airline currently has an agreement with Barclays, which is trying to hold onto the deal after it expires in roughly three years.
- Goldman Sachs is having discussions with JetBlue to take over its credit card program after its current deal with Barclays expires.
- Barclays has partnered with JetBlue since 2016, when the airline ended its co-brand agreement with American Express.
- Barclays petitioned to extend its agreement in late 2020, after which JetBlue formally requested bids from other card issuers and began discussions with Goldman Sachs.
- The airline is also still in discussions with Barclays, and it's unclear which direction it will go.
Goldman Sachs Leaning Into Retail Banking
Goldman Sachs first established its retail banking business in 2016 and began offering unsecured personal loans under the brand Marcus by Goldman Sachs. Since then, the bank added a high-yield savings account, a brokerage account, a buy-now, pay-later service, and credit cards.
In 2019, the Apple Card became the first credit card issued by Goldman Sachs. A year later, the bank beat out Barclays to take over the General Motors credit card portfolio. That deal, which is set to begin in about a year, also creates opportunities for the bank to expand the use of GM vehicles' dashboard touch screens as payment portals—something the carmaker has already begun offering but which has been slow to catch on with consumers.
Now, the bank is looking to expand its credit card portfolio with a JetBlue deal. The bank already partners with JetBlue with its buy-now, pay-later service. Travelers who book with JetBlue or JetBlue Vacations can borrow between $750 and $10,000 at checkout and pay it back over 12 to 18 months.
The bank has also signed a deal to provide a similar service to Amazon Marketplace sellers and is pitching big companies like Google to provide financial wellness plans for employees.
Any Partnership Is Still Years Away
If Goldman Sachs manages to steal JetBlue away from Barclays, it wouldn't take on the airline's co-branded credit card portfolio until roughly three years from now, when JetBlue's current partnership with Barclays is set to end.
This fact could make the push from the bank a relatively risky one. In general, airline credit cards are very lucrative for the banks that issue them. Their cards, which often offer perks like free checked bags and priority boarding, are popular among frequent travelers. What's more, there are only a limited number of airlines.
But over the last year, the airline industry has been hammered by the coronavirus pandemic, and it's unclear how soon it will return to normal after the pandemic ends.
What's more, banks have provided deferments for millions of credit card holders struggling due to the pandemic and subsequent economic downturn and even set aside billions of dollars to cover losses in case those customers never get caught up.
On the consumer side, credit card balances have decreased since the beginning of the pandemic, with more consumers cutting spending and switching to debit cards and cash.
However, credit card issuers like Goldman Sachs are banking that pent-up demand for travel will pay off in the long run.