On March 25th, tech giant Apple announced a plethora of services at their keynote event. Many Hollywood stars made an appearance including Steven Spielberg, Reese Witherspoon, Oprah Winfrey and many more; the event was pretty action-packed. One of the services introduced was the Apple card. This was really surprising to me and I’m sure to lots of Apple users. A tech company like Apple diversifying into the credit card industry is huge, at least that’s how they made it seem at the keynote. Apple has partnered up with Goldman Sachs and Mastercard. Sachs’ role is to issue the card meanwhile Mastercard will handle the payment processing. There is an option for a physical card but from what was discussed at the keynote, it seems the card is meant to be mostly a digital experience.
How real is the hype though?
Well, for starters Apple says the card would have no charges. Additionally, the company promises some of the lowest interest rates for a cash back reward card with the APR rates being around 13.24% – 24.24%. Sounds great, right? Well, for the most part, it is. But if your aim is to pay as little interest a non-rewards card would be better, which has lower rates than a rewards card. The rates set up by Apple are competitive but not the lowest in the industry. For instance, the USAA Visa Platinum credit card APR is as low as 9.15% and has no annual or international fee.
On release, the Apple card can be fully integrated with Apple Pay. Through this, the company aims to provide its users with detailed transaction history and map out where these payments were made. Which is practical if you want to cut down on spending. The payoff calculator shows users interest cost on different payment amounts in real time. These features are hard to find with other companies.
One thing Apple is pushing with this card is privacy. The client’s data will not be sold to third parties for advertising. Moreover, Apple won’t know the details of the customer’s transactions. The transaction history will take place on the user’s device- not on Apple servers. An innovative step compared to its competitors privacy-hostile business models. Hopefully, this step will encourage other companies to consider strengthening privacy policies.
Daily cashback is another term that caught both mine and a lot of other peoples’ attention at the keynote. Apple seems to be providing 3% cashback on its products and services made at an Apple store. 2% on all purchases if made with the card through Apple pay and 1% with the physical card. Clearly, the company is more focused on expanding digital payments. The 2% cashback with Apple Pay appears to be a strategy to market more iPhones. However, Apple Pay charges a processing fee with every transaction. So, the whole no charge with the card is probably just a way to distract users from this.
When the card comes out this summer, there’s no doubt the product will make waves. The laser-etched titanium is definitely eye-catching. But this card is built mostly for iPhone users and those willing to buy one. In the past few years, the smartphone sector has stagnated and this is Apple’s way of further diversifying its products and generating revenue. The card and many of the services announced are a way of keeping consumers within the Apple ecosystem. In the US alone 70% of retailers accept Apple Pay. Naturally, to increase this number Apple integrated the card with Apple Pay.
Apple promises this card is designed for a healthier financial life.
We’ll find out how they stick to this promise in the coming years, starting this summer.