We recently covered off the key takeaways from Apple’s 2019 WWDC keynote and one of the most exciting announcements was the introduction of the new Apple Card. Apple has teamed up with Goldman Sachs to reveal launch details including associated rewards, interest rates and fees. The launch of Apple Card was unveiled at the WWDC event in March 2019 in conjunction with the launch of a range of other services such as Apple News+ and Apple TV+. For Apple and Goldman Sachs, this represents both parties first foray into the work of consumer finance and has the potential to be a disruptive force across the sector. It was originally suggested that Apple had created a partnership with Citigroup to launch the Apple Card, but the relationship fell apart and Apple ended up collaborating with Goldman Sachs instead. Today we’re exploring everything your business needs to know about Apple Card.
Apple Card: Titanium Design
On first glance, compared to other credit cards, the Apple Card looks fantastic. Although it is at first glance, just a credit card, Apple was very keen to convey the effort and time that has been carefully invested in the look and feel of the Apple Card. The Apple Card will boast a minimalistic, titanium design and is touted to weigh in at less than 15 grams. The front of the card features the owner’s name, a microchip and a debossed version of the Apple logo, whereby the logo is indented into the design of the card. The back of the card features a regular credit card stripe that you would expect to see on any credit or debit, the MasterCard logo and the Goldman Sachs logo. According to Apple CEO Tim Cook, the Apple Card is: “A titanium, laser‑etched, Apple‑designed credit card. And Mastercard is our global payment network, so you can use it all over the world. For apps and websites, there’s a virtual card number in the Wallet app. It autofills for you when you’re using Safari.”
One element that is immediately striking about the Apple Card design, when compared to other credit cards, is the fact there is no additional information relating to the card number, expiry date or any other details you might expect to see as standard. From Apple’s point of view, this is designed purely as a security measure, so sensitive information such as the credit card number can only be accessed via the users Wallet App. This is a unique feature that enables Apple to leverage the capabilities of the Wallet App, to deliver an experience with a credit card that would be difficult for other banks and financial services companies to implement, given the ubiquity of the iPhone and other Apple products throughout the world. This means that Apple is ultimately in an amazing position to combine its dominance in high-end technology hardware and software and capitalise on new market opportunities in banking and fintech.
We recently explored why consumers need innovation from their banks and discovered that consumers now expect the same level of service provision and intuitive user experience from banking software products and services, as they would from mass-market consumer platforms such as Amazon, Netflix and Facebook. In other words, banks and financial services organisations need to replicate the quality of experience that users have become accustomed to out-with the fintech sector, which is a serious challenge. Apple clearly understands that this potentially offers them a huge opportunity over existing banks and fintech companies.
Apple Card Target Audience
The other key consideration here and something that will play to Apple’s advantage is the fact they have spent decades developing trust and positive brand perception amongst a highly loyal base of long-term customers. Banking customers that demand a slick user experience from their service providers are referred to as nomads. These users expect to be able to access key financial and banking services at the touch of a button, from any device, at any time and are more likely to engage with ‘mobile-first’ banking services and applications. Nomads have become conditioned to expect their banking software services to be as slick and intuitive as mass-market video streaming services, e-commerce websites and social media platforms. Nomads also expect to receive a highly personalised service based on their actual spending patterns and to receive guidance and tips, based on those patterns, in real-time. Nomads are less interested in the availability of physical bank branches and tend to favour digital service provision via mobile or desktop applications. These types of banking customer fit very neatly into Apple’s desired target audience and are less likely to demand service provision via existing, long-established financial institutions and incumbent banks.
Apple Card v’s American Express: Rewards
The Apple Card offers a range of incentives for customers who purchase Apple software and hardware. Unlike the American Express credit cards, both platinum and gold, the Apple Card has no annual fee, although the Amex rewards program is arguably better. The Amex platinum costs £450 per annum and the gold version is £150 per annum, so the fact that the Apple Card is free should give them an advantage.
Let’s start by exploring some of the available perks associated with using the Apple Card to purchase Apple specific goods and services. When spending on services such as iTunes, the App Store, via the Apple website and in physical Apple Stores, consumers will earn back 3% of the total transaction value. This encompasses any expenditure on games, Apple Music subscriptions, iCloud data storage plans and any IAP’s (in app purchases).
In addition, whenever users spend using Apple Pay, they’ll automatically receive 2% back immediately and for any other transactions, users will receive a 1% cash back straight away. The 2% cash back scheme covers absolutely everything in terms of where you can spend, from Uber and Amazon to McDonald’s and everything in between and there are no associated limits in terms of how much cash can be automatically redeemed. The 1% cash back incentive covers everything else, in other words, anywhere that does not yet take Apple Pay.
One of the great features of Apple Card is the fact that rewards are immediate. With other providers such as Amex, there is a time lag between consumer expenditure and provision of the associated rewards. The way Apple Card operates is that Daily Cash deposits are defrayed on a daily basis via the Wallet app so users do not have to wait to redeem rewards. Another advantage that Apple Card has over Amex is the fact that rewards do not be converted via third parties such as participating hotels and airlines, enabling a smoother process as rewards are quickly deposited as cash.
Apple Card Interest Rates & Onboarding
Initial reports suggest that the Apple Card approval process will rival any comparable market offering, with rumours suggesting the process could take less than 60 seconds. How will Apple achieve this? The answer is pretty straightforward as Apple has the ability to pre-populate the application form data via the Apple ID service. Once the application form has been populated, this means the approval process will be virtually instantaneous and potentially much smoother and faster than competing offerings.
In terms of acceptance criteria, Apple has been relatively secretive (as have Goldman Sachs) about the approval process for consumers with different credit ratings. Despite the secrecy surrounding approval criteria, rumours suggest that a minimum credit score of 600 (999 being a perfect score) would be sufficient for Apple Card approval with a credit facility to the tune of £1000 combined with potentially lower interest rates compared to applicants with a lower credit score.
This signals that Apple Card is being positioned as a mass-market product, as Goldman Sachs will be responsible for lending to applicants with a moderate credit score. For applicants with a credit score below 600, the expectation would be that the lending facility would be less than £1000 and subject to higher rates of interest. In some instances where credit scores are too low, applicants will be rejected. It’s envisaged that interest rates will vary between 13% and 25% depending upon credit score. Once applicants have been accepted and approved, they can use the ‘virtual’ Apple Card with immediate effect, whilst the titanium physical version is being dispatched with an estimated delivery time of one week.
How To Activate The Apple Card
The Apple Card can be activated in the same way users would activate any other Apple product or accessory. When users receive the physical version of the Apple Card by post, they’ll notice a pairing icon which contains an NFC (near field communication) chip. By holding the iPhone to the pairing icon, Apple can dynamically associate the iPhone with Apple Card itself. For users of HomePod or Apple AirPod, the onboarding interface is very similar. The next step in the on-boarding process is configuring security settings.
Apple Card Security Features
We’ve already covered off some of the elements and features that make Apple Card unique relative to its competition. One of the key characteristics of the Apple Card is the absence of any visible user data such as the card number itself and the associated CVV. Apple Card owners can access all of these details via the Wallet app. The Apple Card also manages to generate a unique card number for every online purchase that’s made, providing an extra layer of security.
In terms of fraud prevention and detection, if Apple detects malicious activity, the user will receive a push message that gives them an option to accept the transaction or mark it as potentially suspicious. The Apple Card also seamlessly integrates with Apple Business Chat in order to enable direct communication between the support team and the user whereby concerns surrounding fraudulent activity can be conveyed via text message.
One of the key messages Apple is trying to push relates to user privacy and security. The launch of the Apple Card serves to reinforce this message, as they are refusing to sell or pass on user data to third parties for marketing purposes. Tim Cook was quick to emphasise: “We believe in your right to privacy. That’s why we created a unique architecture for Apple Card that generates your transaction history and spending summaries in the Wallet app on your iPhone. Goldman Sachs will use your data to operate Apple Card. But they never share or sell your data to third parties for marketing or advertising.”
Integration With Apple Wallet
The Apple Card will integrate directly with Apple Wallet and a wide range of other proprietary Apple services. This is a very smart move from Apple and for fans of the Wallet feature, this will be viewed as a welcome addition. As an example, Apple Card also integrates with Apple Maps to pinpoint the precise location of each and every transaction a user initiates with associated details relative to the transaction itself (amount, supplier name etc).
The Apple Card will also utilise the same ‘ring’ system that users of the Apple Watch will already be familiar with to monitor the balance of the card and how much interest is being applied. In terms of repaying the Apple Card, the Wallet app provides the ability to repay on a monthly, bi-weekly or weekly basis. The Apple Card also leverages artificial intelligence to make suggestions based on how to optimise repayment plans and avoid the accumulation of unwanted interest payments.
One of the major selling points of the Apple Card is the absence of fees. With the exception of interest charges and repayments, the Apple Card has no annual fee, no balance transfer fee and no fees associated with payments made in foreign countries. There are also a range of other fees that are not associated with the Apple Card that you would find with other credit card providers such as fees for advancing cash and fees for increasing the credit limit on the card. In addition, if a payment is missed, Apple Card will not charge for late payment or instigate a higher rate of interest.
When Will It Be Released?
The Apple Card has been pencilled in for release in the summer of 2019 and is currently being tested by Goldman Sachs and Apple employees. It’s anticipated that the Apple Card will officially be launched to coincide with the planned release of iOS 12.4 which is likely to present the latest version of Apple Wallet. If you’re interested in signing up for an Apple Card, you can receive notifications on release dates here. So there you have it, everything you need to know about Apple Card. If you’re interested in better understanding the capabilities of Apple Card, or thinking about undertaking a digital transformation project in the fintech space, it’d be great to hear from you, you can contact us here to start the conversation.