Goldman Sachs To Pay $2.5B For General Motors’ Credit Card Business

Goldman Sachs has beat out competitor Barclays to buy General Motors (GM)’s credit card business, according to a report from The Wall Street Journal (WSJ).

The purchase will go through for approximately $2.5 billion, and it furthers Goldman Sachs’ push into Main Street lending. By beating Barclays in the deal, Goldman now has access to the over 1 million cardholders who account for roughly $8.5 billion in spending per year, WSJ reported.

In their pitches to GM, both Goldman and Barclays promoted the idea of cars as eCommerce portals, a notion supported by auto makers and card networks like Visa and Mastercard. GM was the first company to let drivers use touchscreens to do things like order food, pay for gas or book hotels.

Goldman’s bid for GM’s card business shows the promise many companies see in connected commerce, such as the vehicle eCommerce idea, PYMNTS reported.

Goldman has worked out a rough deal with Capital One Financial Group, with the purchase price included. WSJ reported sources said the deal is expected to be finalized in the next few weeks unless it falls apart. Goldman will likely pay a slight premium, intending to make up any losses by selling its own products to GM cardholders, such as online savings accounts, personal loans and investment products.

Without a well-known brand or branches, Goldman has turned to partnerships like the Apple Card, which had $4.5 billion in outstanding balances as of June 30, and a deal to lend to JetBlue Airways passengers and Amazon marketplace sellers, WSJ reported.

Goldman has now won two victories in the credit card sphere with its Apple Card launching last year. Now, it plans to look for other such deals to enter into, according to WSJ. However, that could prove difficult. Banks are deferring payments for millions of cardholders, and they’re now setting aside billions of dollars to cover losses in case the debts don’t get paid back.