Apple Card: The Rise of Digital Credit Cards
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Apple Card: The Rise of Digital Credit Cards

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Whether you’re an Apple fan or not, there’s no denying the company’s latest undertaking – its Apple Card – fits the Apple ethos perfectly.

Way back in 2009, Apple’s chief executive officer Tim Cook detailed Apple’s values quite succinctly1. He said he believed Apple’s reason for being was to “make great products”, with a focus on the “the simple, not the complex”. He also said Apple wouldn’t “settle for anything less than excellence”, participating only in markets where the company “could make a significant contribution”. Lastly – and this will ring true for most Apple fans out there – Cook said he believed in “deep collaboration and cross-pollination” of Apple’s products, stating this allowed the company “to innovate in a way that others cannot”.

From its 1997 Think Different campaign, Apple really has done things differently. Remaining true to its philosophy with each successive launch, it has released products that are not only innovative, but simple to use; that not only look beautiful, but function beautifully as well. Drawing users into the Apple ecosphere, these products have changed the way we do things, whether that’s the way we listen to music, the way we work, or the way we communicate.


Copyright © 2019 Apple Inc. All rights reserved.

So, now that Apple has introduced the first edition Apple Card to the world, you have to wonder what kind of effect this will have on the way we interact with money. While Apple Wallet may have been around for a while now, this is Apple’s first proper foray into the world of financial services. As you would expect, Apple would not be happy putting its logo on just any old card. According to Apple, its Apple Card “completely rethinks everything about the credit card”. Pretty bold statement, but the company does have form to back it up.

Surrounded by innovations within the financial sphere – think mobile wallets, cash-sharing apps and cryptocurrency – Apple will certainly have its work cut out to make meaningful change in this industry. So, how does Apple Card stack up? While it may look the part, does Apple Card really have what it takes to change the way we think about credit cards? And if it does, what will this mean for the credit cards of the future?

What does Apple Card offer?

At its core, Apple Card does what every credit card does. It offers a line of credit to approved customers, letting them buy stuff now, and pay it back later. However, when Apple first announced the card back in March, it promised “the most significant change in the credit card experience in 50 years”. Well then, what is it that sets it apart from the competition?

Digital Over Physical

While there has been plenty of press surrounding the sleek, chic Apple Card in its physical form, the concept of this card is actually digital. When you apply for Apple Card, you do so digitally. From there, your new card lives entirely in your iPhone’s Wallet app, allowing you to make purchases instore and online, view your transactions, and manage your account. Of course, while you can request a physical card at no extra cost – to use at stores that don’t accept contactless payments via Apple Pay – the card itself is strictly a supporting act, rather than the main event.

At this point, it’s also worth pointing out that Apple Card is designed for iPhone users only. Given its virtual status within Apple Wallet, it can only be used by those who own an iPhone. Obviously, this tactic not only disregards Android users, it also works to pull Apple enthusiasts further into the fold.

Ease of Application

Applying for a credit card can be somewhat tedious. While online applications have certainly made the process a lot less painless, it still takes time to fill out all those little boxes. Aiming to remedy this, Apple works to make the process of applying for Apple Card as easy as possible.

To apply, all you need to do is launch the Wallet app, press the button to add a new card, and select Apple Card. From there, you’ll have to enter some personal details. Those who have already applied state that this only takes a few minutes. If you’re approved, you will then receive an offer, which will include your credit limit and your purchase rate. You can accept the offer to start using Apple Card immediately. No long wait for your new card to arrive in the post – with Apple Card ready in your Wallet app, you’re good to go.

If you decide you want the physical card, you make the request in – you guessed it – the Wallet app. Reports from Apple Card users say cards typically turn up within the week. To activate the card once it arrives, you open the Wallet app, press the button to activate your card, and then hold your phone near the packaging as indicated. The option to activate your card will pop up in a window on your iPhone, similar to the process of pairing your AirPods with your phone.

Ease of Use

As you would expect, Apple Card is also designed to be easy to use. If you have ever used Apple Pay with a different card, using Apple Card will feel very familiar. Simply select Apple Card as the card you want to pay with (you can make it the default option for Apple Pay when setting up your card, or within the Settings menu later), to use it either online or instore.

If you’re online, use Apple Pay during checkout, and Apple Card will do the work for you. If you’re instore, hold your phone near the payment terminal, double-press the side button, and authenticate via Face ID, Touch ID, or your passcode. If the retailer does not support Apple Pay, you can use the credit card number stored in the Wallet app to make the purchase manually.


Copyright © 2019 Apple Inc. All rights reserved.

Rewards

A credit card that offers rewards is hardly ground-breaking, but rewards are still nice to have, especially when they are as user-friendly and convenient as Apple Card’s Daily Cash. There has been a lot of talk in the media about the miserly rewards offered on Apple Card, but within the Australian credit card market, they’re actually pretty generous – particularly when you consider the fact that there is no annual fee to pay.

How does Daily Cash work? Using the card with Apple Pay, cardholders will receive 2% Daily Cash for everyday purchases, and 3% Daily Cash for purchases made directly with Apple. Using their physical Apple Card, they will get 1% Daily Cash on their spending. Apple is also working to add partners to its rewards scheme, and now offers 3% Daily Cash with partners such as Uber and Uber Eats.

What do you do with your Daily Cash once you’ve got it? Each day, the Daily Cash you earn is added to another virtual card in the Wallet app, called Apple Cash. You can use the funds on your Apple Cash card in any number of ways: you can use it to buy stuff via Apple Pay, you can use it to pay off your Apple Card balance, or you can send it to a linked bank account.

No Fees

A feature that will likely appeal to most cardholders is Apple Card’s lack of annual fee. Further setting itself apart from the competition, the card also has no foreign transaction fees, no late fees, no reward‑redemption fees, no returned‑payment fees and no over‑the‑limit fees. Quite simply, there are no hidden fees to worry about on Apple Card.

Whether Apple Card will retain its no annual fee status when it eventually hits Australian shores is unknown. Rewards cards typically come with an annual fee as standard here, with very few worthwhile options choosing to offer their wares in return for no annual fee.


Copyright © 2019 Apple Inc. All rights reserved.

Interest

Apple promises low rates on its Apple Card, but the interest you pay will depend on your creditworthiness. That means your purchase rate could range from 12.99% to 23.99% p.a. Whether you are on the low end or the high end of that scale, “the best way to save on interest is to pay your balance in full every month”, as Apple itself says.

When that’s not possible, Apple Card can help you make the best choice regarding your repayments. Simply choose the amount you want to pay, and Apple Card will estimate the interest cost for you. Apple Card also offers up smart payment suggestions, encouraging you to pay a little more than you normally would, to help you pay off your balance faster.

Insight

Perhaps one of the most appealing features on Apple Card is the insight it provides via payment tracking. While your current credit card app may list the various transactions you have made, Apple Card goes one step further, doubling as a financial wellness tool. Clear and concise, Apple Card’s interface allows you to get a better view of how you’re using your card, to see what you are spending your money on, and where.

Providing a visual representation of how you are spending your money, an image of your Apple Card in the Wallet app features colours that change as you use it. With each colour representing a spending category, such as food and drink, entertainment, and transportation, you can easily see where your money is going. Below this is your balance, along with a graph that shows your weekly activity, recent transactions, and options for paying off your balance and contacting support.

Apple Card even makes it easy to track transactions you don’t recognise. Using Maps, Apple Card can pinpoint where you bought something, so even if the transaction itself shows nothing but a mysterious merchant code, you can see whereabouts it was made. Still not sure you made that purchase? Tap on the transaction to let Apple know, and they will look into it for you.


Copyright © 2019 Apple Inc. All rights reserved.

Look

Apple Card in its physical incarnation is simple, sleek and some would say, beautiful. While it may have received bad press for its delicate nature – it should not be placed near leather, denim or loose change, apparently – this titanium beauty is much prettier than your standard plastic credit card. It has the polished, lightweight feel you’d expect from an Apple product, offering a minimalist look, with nothing but your name, the Apple logo and the security chip visible on the front of the card.

As for its instructions for care – which the media has mocked Apple for so mercilessly – they are not much different to those of the iPhone, iPad and many other Apple products. While you may not have considered cleaning your credit card before, you can do so with Apple Card, using a microfibre cloth and isopropyl alcohol. And if your card ever looks less than tip top, Apple will replace it at no extra charge.

Security & Privacy

While Apple Card’s minimalist design may look good, it has another, more important purpose. With no credit card number across the front of the card, there is no information for prying eyes to see. If someone does steal your physical card, all they have is your name, so all you need to do is access your Wallet app to cancel the card and ask for a new one. You can continue to use your Apple Card via Apple Wallet in the meantime.

It’s also worth noting that every time you use the card, you will get an instant notification. Not only can this help you keep a handle on your spending, it can also let you know immediately if something isn’t right. Using fraud technology, Apple will also notify you of any unusual activity – and like most credit cards, you won’t be liable for any fraudulent charges.

As for privacy, Apple utilises unique security and privacy architecture with its Apple Card, so as a company, it does not know where you shopped, what you bought, or how you paid.

Credit Cards Moving On

While Apple Card may be a card that “represents all the things Apple stands for”, it might be a stretch to say it brings about the biggest change in the credit card industry for five decades – as Apple suggested at the card’s initial announcement. But, that’s not to say Apple hasn’t pushed the concept of the credit card a little further along.

Raising the bar for how a credit card should perform, Apple Card has simplified not only the application process, but everyday use as well. It allows cardholders insight into their spending, saving them on fees, while showing them how they can make better choices with their repayments. On top of that, it has provided security and privacy within an industry constantly bombarded with threats, while allowing cardholders to go digital in all aspects of their credit card spending, tracking and management.

In a memo sent to employees, David Solomon, CEO of Apple Card’s issuer Goldman Sachs, pronounced, “Apple Card is big, but it’s also a beginning.” While Solomon was most likely referring to Goldman Sachs’ sortie into the world of credit cards, it would not be untrue to say that Apple Card could be something of a new beginning within the credit card industry.

Given Apple’s sway among the masses, Apple Card could push other card providers to keep pace, encouraging innovation within an industry that’s not seen much change since the inception of the credit card in the 1950s. So, where could credit cards go from here?

Going Digital

Obviously, the biggest differentiator between Apple Card and its competitors is the fact that it’s a virtual card first, and a physical card second. With this focus on mobile payments, Apple Card could show cardholders en masse just how convenient being wallet-less can be, while encouraging more merchants to support this kind of payment. Whether you’re taking a taxi, paying for parking, or simply buying your morning coffee, you could use your phone to pay for purchases large and small, while leaving your wallet at home. Who needs plastic anyway?

Improving User Experience

Within the current credit card market, card providers tend to compete on price and rewards. While Apple also competes within these areas, its main point of difference has to be user experience. By providing a digital card, Apple has moved credit cards further into the virtual world, where user experience is key. To keep up, other card providers will have to do a lot more than simply sending out credit card statements once a month, while providing a lacklustre app.


Copyright © 2019 Apple Inc. All rights reserved.

Rethinking Spending Patterns

While card providers in Australia now have to provide us with info regarding interest costs should we choose to make only the minimum payment, it’s safe to say the way they do this is far from dynamic. By taking initiative from Apple, card providers could provide easy-to-understand information alongside helpful, intuitive tools to allow cardholders to learn how to be smarter with their credit cards, helping them get out of debt, or potentially, avoid it altogether.

And while Apple may be simply repackaging credit card data into a more visually pleasing package, utilising charts, graphs and colour does make managing money that bit more tolerable. By using an interface like that of Apple Card, cardholders could see exactly how they are spending their money. With a better handle on this information, it could encourage them to get wiser with their spending, rethinking their spending patterns while working to keep their ongoing debt to a minimum.

Increasing Security

Introducing the digital card format to the masses, Apple has had to think long and hard about how it would deal with security. So, how does it ensure each transaction is private and secure? First up, there is a one-time security code to protect your unique card number, and all transactions are backed up by Face ID or Touch ID. As for the physical card, it has no card number, no expiration date, no CVV and no signature. Card providers going digital in the future would have to think similarly hard about how to ensure cardholders’ security and privacy, which should help to encourage innovation within this sphere.

Sharing Family Spending

While Apple Card doesn’t allow for joint or additional accountholders, this could be something that makes sense later on down the line. As an Apple user, you can enjoy Family Sharing within your Calendar, within your Reminders, within iTunes and elsewhere. It only makes sense that you would move towards Family Sharing with your credit card as well. As everything to do with Apple Card is digital, this would make it easy for accountholders to track spending, while managing their family’s accounts. And if Apple does it, other digital card providers will likely follow suit.

Offering Instant Rewards

Here in Australia, rewards programs require patience. Not only do you have to wait, wait, wait to rack up a decent amount of points, you may also have to wait until the end of the month to see a change in your points total. But, while some cards make cardholders wait for their rewards, Apple Card tallies up its rewards at the end of each day. So, instead of waiting months to save up for a toaster you could probably buy yourself for $30, you can use your Daily Cash instantly, on almost anything you like.

By offering Daily Cash on everyday purchases – as well as better cashback rates with popular partners such as Uber and Uber Eats – Apple Card may just push traditional card providers to become more flexible with their rewards offering, to provide more innovative, relevant rewards that shock, actually reward cardholders.

Dividing Users

While there is no doubt Apple designed its Apple Card to entice Apple fans further into the Apple Ecosystem, it would be interesting to see if other tech providers follow suit. Both Google Pay and Samsung Pay offer an alternative way to pay, but will there soon be a Google Card or Samsung Card that can only be used with Google or Samsung products? If so, this could see a divide in the way smartphone users not only access new technology, but in the way they deal with their money, completely dependent on their smartphone alliance and their provider’s credit card offering.

Getting Into Data Sharing

With so much data being gathered on one device, it would be tempting for Apple to use it for nefarious purposes. However, Apple states it doesn’t know where you shop, what you bought, or how much you paid. It also assures Goldman Sachs will never sell or share data to third-party companies, revealing your spending habits to advertisers. And of course, Mastercard simply processes payments.

But while Apple makes those promises, will those who follow do the same?

Providing Personalisation

Whether or not credit cards of the future will mine our data, one thing is for sure, they are going to get smarter over time. It’s likely that cards will evolve with the application of artificial intelligence to create a more tailored approach, personalising each card to better suit the cardholder. AI will also likely be used to detect and fight fraud, while working to manage cardholder spending habits and payments, detecting patterns, and tailoring the types of products or services offered to cardholder needs.

Moving Away From Banks

Will traditional banks become out-dated as outsiders such as Apple move in? As long as they keep up with what newcomers are offering, banks don’t necessarily need to lose their place in the credit card industry. Plus, it’s worth pointing out that while Apple says its Apple Card is “created by Apple, not a bank”, this statement is somewhat misleading. Apple Card is not entirely Apple. It is of course, backed by a bank – Goldman Sachs. So, even if newcomers enter the fray, it’s likely they will have the backing of one of the big banks. No need to cry after all, Big Four.

Making Life Easier

Everything about Apple Card is designed to make life easier. From applying for the card to earning rewards, from tracking everyday spending to paying off purchases, Apple Card is as frictionless as it gets for a credit card. The only question is, how long will it take for traditional card providers to catch up? While big banks are typically content to rest on their laurels, no great advancements were ever made from standing still. Apple may have given us a glimpse of the future of credit cards, but it’s up to card providers old and new to continue to make change. And, of course, it’s up to us to encourage them, by choosing cards that we think are heading in the right direction.

1. https://www.macrumors.com/2009/01/22/tim-cooks-view-of-the-apple-philosophy/

Founder - Roland B Bleyer

Roland Bleyer

Founder of Creditcard.com.au. Roland has extensive knowledge about credit cards in Australia. Known as a credit card expert, he has been featured on tv and in various publications. Some popular offers on our site right now include the ANZ Low Rate. Ever popular with a low annual fee, purchase rate and 0% balance transfer. For those wanting to earn Qantas points. Have a look at the HSBC Platinum Qantas with strong points earning, low rewards annual fee plus both domestic and overseas travel insurance.
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