Apple Card launch generates major buzz, but industry split on long-term impact

Apple Card made its long awaited public debut on Tuesday after an invitation only trial period where the technology company was able to observe any last minute kinks in the system. 

The no-fee credit card, issued by Goldman Sachs and operating on the Mastercard network, has been highly anticipated, while at the same time the subject of fierce debate from analysts and industry observers. The questions seem to center around whether Apple will help drive mobile adoption based on the Apple Card’s simplicity and ease of use or whether the product fails to break new ground on any single product feature. 

“By promoting digital credit cards and contactless point of sale, Apple is accelerating a shift in consumer behavior and frictionless checkout,”Michael Jaszczyk, CEO of GK Software USA, said in a statement. ” As consumers realize how easy it is to use a mobile device to check out, they may start demanding acceptance of this option wherever they shop and dine — and not just retailers in Apple’s partner network. 

As previously reported, Apple Card is built as an iPhone-based mobile credit card that give users the ability to control and gain a ton of insight into their spending habits. Like many mobile credit and banking apps today, it’s designed as much as a financial wellness tool as a digital payment mechanism. 

The app gives customers weekly and monthly summaries of their spending, uses machine learning and Apple Maps to take images of the merchant location where customers make their purchases and offers customers the ability to accelerate the payoff of their credit balances, by giving them clear guidance through a series of tools designed to help them figure out how they can make monthly payments that will get them out of the cycle of debt. 

APR’s range from 12.99% to 23.99% according to the Apple release and Apple doesn’t charge a late fee or charge high interest penalties for a missed payment. 

An analysis by WalletHub showed that Apple Card is not a good option for consumers that carry a balance, and analysts at the firm say that Apple Card should be avoided by anyone who doesn’t pay their bill in full each month. The firm also noted that the card doesn’t feature 0% introductory rates, which many other cards provide. 

“The only people who should consider applying for the Apple Card are those who pay their bills in full and spend a lot via Apple Pay,”said Odysseas Papadimitriou, CEO of Wallet Hub, in a statement released by the firm. 

Cashback competition

Apple Card is also touted by company officials as being among the more generous cashback products from a rewards standpoint, offering up to 3% back on Apple product purchases made through Apple Pay and 2% back on other purchases made through Apple Pay. 

“While I do think that Apple Card is a game changer, I don’t think it has to do with the loyalty component, although daily crediting of value is a good idea,”Thad Peterson, senior analyst at Aite Group said via email. “Instead, as with most things Apple, it’s the user interface and the experience that is a significant differentiator.”

Peterson told Mobile Payments Today that the information Apple provides customers about their transactions and payments is beyond anything he’s seen with any other card product. 

For example, Apple Card gives users an image of the merchant or business lcoation where purchases are made and provides a map of the location, which is well beyond the traditional sales pitch.

The agreement with Uber could help make the Apple Card a far better value proposition after it was widely criticized for loyalty options when first announced, according to Kyle Thorn, director of marketing at Zafin, told Mobile Payments Today via email. 

“Daily cash back on Uber and Uber Eats purchases could very well offer meaningful value to Apple Card holders,”he said. “As the credit card rewards market in the U.S. remains very competitive – especially when competing for millennials – traditional banks will need the flexibility and agility to keep up with Big Tech around innovative, relevant products and rewards.”

Cover images: Courtesy of Apple