Fintechs have been trying for years to relegate banks to mere infrastructure companies, but so far had little success. The reason for this was that they were just too small to have a decisive impact on the sector. That is why banks were closely monitoring Amazon, which is big enough to cause them trouble. While they were doing that, Apple quietly pulled a coup.
In association with Goldman Sachs, the tech giant has taken advantage of all the weakness of the current system in order to create its own. Backed up with the most loyal customer base in the world, it launched a product that has been a sole purview of banks until now.
“Apple is not a small finch,” says David Murphy, SVP EMEA & APAC Banking Lead, Publicis Sapient. “They can put pressure on pricing and steal significant share.”
That is why the launch of the Apple card got more attention than all fintech news in the last few years combined.
Apple has been built on innovation and is the original fintech company. Everything they do comes with a hefty dose of innovation and change and their card will be the same.
“Apple has re-engineered everything we have come to know about the entire [credit card] experience,” says analyst Brian Roemmele.
Apple saw a chance to completely rehaul and rethink the card experience and they jumped on it, but it would seem their plans don’t end there. They do have some other, bigger ambitions in their sleeve.
“Everyone’s looking at this and comparing credit card to credit card,” Forrester Research Principal Analyst Alyson Clarke states. “It’s not about that. It’s the start of a relationship and a very different way of banking — digital from the ground up. It’s more secure and it’s about helping you improve your financial position. I completely expect to see Goldman and Apple extend this relationship into a day-to-day banking product where you can put your salary and pay your bills with a savings product. That should scare a lot of banks including a lot of the digital banks.”
Issued by Goldman Sachs, Apple Card will be on market this summer. It is a virtual card that will run on Mastercard network and it can be used online, in apps and in all stores that accept Apple Pay, which is 70% of all stores in the United States, according to Apple.
It will also double as a financial coach, drawing from success Apple had with its Health app. It will encourage customers to pay less interest and provides them with a better understanding of long-term cost. It will also give them weekly and monthly summaries on their spending, with categories for each payment. The card won’t have a minimum payment and it will be based on a monthly cycle.
Apple card will have a 2% cash back on every transaction, which is about the average cash reward. Payments made directly to Apple will have a 3% cash back. Instead of giving huge cash rewards, Apple and Goldman Sachs decided to give their customers something called Daily Cash. This reward is paid directly to Apple Wallet and can be used to reduce the card balance or for purchase. You can even send it someone via Apple Pay Cash. This is a unique feature no other card is offering. “No one pays daily cash rewards that are instantly redeemable,” Richard Crone said in a LinkedIn blog.
Apple has paid special attention to security. The use of the card is authenticated by facial ID or fingerprint. Apple doesn’t get to see transaction details since all of them are happening on the phone and not on company servers. Both Apple and Goldman Sachs have committed to not selling cardholders’ data to anyone. In today’s day and age, this is something many customers will find appealing.
In line with its branding strategy and product design, Apple has achieved that a simple credit card looks breathtaking. It’s sleek and minimalistic design reflects the Apple brand perfectly. It is made of titanium, with laser-etched user’s name and Apple logo. The physical card will be used wherever Apple Pay is not yet accepted, which won’t be many places. The metal card probably won’t be free, but many would gladly pay to have it and flash it around.