Apple takes a bite out of credit card industry

The company has decided to become a banking player with a brilliant move

Photo: Apple Vice-President of Apple Pay Jennifer Bailey presents the titanium version of Apple Card.

You might want to forget about Apple's TV+ and ignore Apple News+, as well. The real big news surrounding the tech giant as its splash into the lucrative credit card industry - a bold move for Apple that no other media giant has sought, even Google and Samsung, two companies that also have robust mobile payment systems.

Rolling out this Summer, the Apple Card expands the company's digital Apple Pay services, marrying the physical card to a virtual one and integrating both with the iPhone. This means it is both a digital card that lives on your iPhone, with a traditional credit card backup that you can use where Apple Pay isn't available. And it is designed to do things no other card can. Yes, on the surface, Apple Card is indeed a way for Apple to sell its brand on another everyday object you likely already own. But beneath the veneer of a titanium credit card with the Apple logo on it, there is a bevy of perks - quick sign-up, elimination of most fees, strong security protections and cash back.

"We wanted to take the Apple Pay experience even further. We saw an opportunity to transform another fundamental method of payment. That's the credit card. We think Apple's uniquely positioned to make the most significant change in the credit card experience in 50 years," Tim Cook, CEO of Apple, set up the motive onstage of company's big March event.

So what does Apple Card offer exactly? According to the company, there will be no fees associated with the card. That means no late fee, no annual fee, no international fee and no over-the-limit fees. An interest rate supposedly lower than the industry average is also in sight. On top of that, the card comes with a pretty straightforward rewards program that incentivises consumers to use Apple Pay to buy Apple products, for the most cash back at 3%. Those who use the virtual card will receive 2% on their purchases and 1% is they pay with the physical version. And as Apple claims, this is the only card to provide those rewards in real time, so that cash earned can be used immediately.

To lure customers even more, Apple has also made an effort to be the only tech company you actually trust by leaning heavily on its privacy-first approach. As a result, the physical card has no numbers so purchases are made with the embedded chip and the digital version lives in your Apple Wallet on your phone, where it's protected by fingerprints or facial recognition. That means that even if someone steals your phone, they won't be able to use the card to buy things. Onstage yesterday, CEO Tim Cook also said the card will not collect data on your transactions, and Apple will not let its partner bank, Goldman Sachs, sell any data to third parties.

All of these promising features may be great for the users, but they also beg the question: how would Apple make money without those usual stipulations? Well, it seems the goal may not be to turn a profit, at least not on the service itself. It all comes back to Apple Pay. The company is obviously launcing the credit card to spur adoption of Apple Pay, and to create a digital wallet that can be used not just in the real world, but also inside an iOS ecosystem that is increasingly being peppered with new, for-pay services. In addition, a credit card that works on the iPhone alone will only make you more dependent on your iPhone.

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