A lack of unique features means Apple Card is unlikely to be a success in the US credit card market.
The Apple Card is a credit card account for Apple Pay users, issued by Goldman Sachs and Mastercard. The account is primarily digital, but Apple is also offering a physical credit card as a companion to the account. The launch is designed to get more people to use Apple Pay.
However, according to GlobalData’s Mobile Wallet Analytics almost half of respondents surveyed in the US do not have a mobile wallet and are not interested in getting one. Given this, it is unlikely that Apple will “rethink” the US credit card market with this launch.
Apple is undoubtedly a technology leader. Yet it is not taking advantage of the move towards contactless card payments in the US, as the physical Apple Card is not contactless. Instead Apple is prompting consumers to make payments using their iPhone. By doubling down on Apple Pay, Apple is limiting the reach of this new account to consumers who are already sufficiently engaged with the brand to adopt its niche mobile payment service. As a result, the overall impact of the account would be sharply limited even if it had compelling unique features to offer.
Apple Card is using design as a selling point. Sleek and minimalistic, the physical credit card does not include a card number, CVV code, expiration date, or signature. But here there are parallels with Venmo Card and Chase Sapphire Reserve Card, as these cards also do not present credit card numbers or other information on the physical card. And these cards are manufactured using various metals to further stand out.
Apple is hoping to entice consumers and be a success by providing spending summaries, albeit only allowing users to track Apple Card spending. There are plenty of superior budgeting apps available, such as Mint, that permit users to track spending across multiple accounts.
The new Apple Card also offers users various cashback rewards. 3% cashback is offered by Apple on all MacBooks and iPhones – a clear bid to push the sale of expensive own-brand products. Meanwhile, purchases made by consumers at other stores will benefit from 2% cashback using Apple Pay. Alternatively, if the physical credit card is used, 1% cashback is rewarded.
While these rewards seem appealing at a glance, there are superior cashback offers in the market. For instance, Citi Double Cash is available with no annual fees, provides consumers with 1% on all purchases and then 1%when paid off, whether in full or in instalments, without requiring the use of a mobile wallet.
Despite its lack of unique features, the Apple Card differentiates by promising to keep consumers’ credit card transaction data private and their financial information secure. More specifically, Apple will not monitor customers’ shopping habits and will not share or sell their data for marketing and advertising purposes. This is probably the account’s only true differentiator, and is unlikely to have mass appeal.
Apple Card is not unique in terms of rewards, design, or features. Apple’s commitment to data privacy may appeal to those who are concerned about this issue, or the sheer strength of its brand may attract users.
However, Apple Card will likely have a negligible impact on the US credit card market, as Apple has merely launched a standard product with a few gimmicks.