Last month, Apple announced that they will be releasing their first ever consumer credit card, the Apple Card. Ever since the introduction of Apple Pay, I’ve been excited for the potential of a completely digital payment system. I don’t know about you, but I’m tired of carrying around a wallet and a phone, and while Apple Pay has been a step in the right direction, it hasn’t offered enough solutions to completely replace the need for a physical wallet. So, when Apple announced that they will be launching a physical consumer credit card this summer, I was intrigued and also a bit confused as this seems like a step backwards.
Let’s first go over the details of the Apple Card. It is a mobile-first credit card that lives in the Wallet app on iPhone, but members will also receive a physical card for use in retailers or online where Apple Pay is not yet accepted. The card is completely free of fees – no annual fees, late fees, international fees or any other hidden fees. It also offers cash back rewards for all purchases: 3% for purchases made on Apple products or services, 2% for purchases made with Apple Pay, and 1% cash back on purchases made with the physical card. The interest rates are on par with other similar cards, ranging from 13.24% to 24.24% based on creditworthiness. While these features aren’t as revolutionary as I had hoped, Apple Card will surely stand out due to its privacy features and user-friendly experience.
Security and Privacy
We’ve already seen with Apple Pay that Apple has superior security and privacy compared to other payment methods, and Apple Card takes it another step further. Once you are approved for the card, a unique device code is generated and stored in your phone. Each transaction requires that device code as well as a one-time security code that is generated using Touch ID or Face ID. The physical card has no numbers printed on it, which allows you to generate a new credit card number within the app as often as you’d like. Apple also promises that they will have no access to information regarding your purchases or spending habits, and that Goldman Sachs (the issuer of the card) will never share or sell your data for advertising.
The card and its features are all housed in the Wallet app on iPhone. From here, users can apply for the card, manage spending and even claim their Daily Cash rewards. Apple’s goal with this card is to be extremely consumer friendly, hoping to give users a better understanding of their money and spending habits. The app will use machine learning to find exact names of retailers instead of displaying the confusing names seen on most other bank statements. If you are still unsure of a charge, you can pinpoint it on a map by simply tapping. Additional features include basic budgeting tools as well as an interest estimator to encourage healthy financial decisions.
While the Apple Card is a step in the right direction toward a completely digital banking experience, it is just that – a small step towards the end goal. I’ve been using Apple Pay for a few years now, and the biggest problem I keep running into is that the infrastructure to support this method of payment hasn’t been fully adopted. According to Apple, retail acceptance of Apple Pay is over 70% in the United States. While that number may seem high, we won’t be able to ditch the plastic until Apple Pay is accepted by 100% of retailers.
The Apple Card isn’t exactly revolutionary or groundbreaking, but its tight integration with iPhone does provide a promising future. The upgrades coming to the Wallet app are definitely an improvement, but there are a few features that I think the Apple Card is missing. Right now, it seems as though the app will break down your spending into categories, then create color coded charts so that you can understand where your money is going at a glance. My biggest problem with this is that I want to be able to set limits for each category and be notified in real-time when I am approaching these spending thresholds so as not to exceed my budget. I think that integrating some additional intelligence tools to help users better manage their money could take this service to the next level.
As I continue to ponder the benefits of the card, I seem to be more excited about the potential features rather than the current offerings. The Apple Card is definitely setting the stage for mobile payments to take over the banking industry, but it doesn’t look like it’s time to toss our wallets quite yet.