I'm still mystified by what supposed competitive edge the Apple Card is supposed to have. Its rewards program is pretty mediocre, and virtually every Visa/MC/Amex supports Apple Pay seamlessly as is.
I'm pretty bought into the Apple ecosystem and do almost all my spending via credit card. I feel like I am supposed to be the target market, so what is the selling point?
Compared to my MajorBank card, I expect that Apple Card will have somewhat worse rewards. But the process - signup, spending tracking and notifications, accessing rewards, freezing, cancellation - will be leagues better, and privacy will be better too. That will be their edge.
The MajorBank mobile app is weird and janky feeling, with lots of ads and other nonsense in it. It pushes me to open investment accounts and take out a mortgage. It tells me I can get 10% back at KidsPizzaRestaurant. It promotes "offers we've selected just for you based on your relationship with MajorBank," through virtue of monitoring my spending history.
I expect none of that from Apple. In my mind the risks are 1. Goldman Sachs and 2. Apple's financialization / being incentivized to push people into debt.
Apple Card is just a co-branded credit card no different than a Chase United MileagePlus card. Apple, like United, is the co-brand partner -- the face -- Goldman, like Chase, does literally everything else. Apple Card has a few neat features but not much more than anything else you've added to your Apple Wallet.
Credit cards are a high CAC business in the premium space -- hundreds to a thousand dollars for an Amex Platinum class card. All Apple does different here is lower CAC by leveraging their immense brand power and their retail network and a few neat frilly UI features. Those aren't worth the opportunity cost of a 2% flat cash back card with no annual fee like the Citi Double Cash, or 2.67% with Bank of America if you have 100K in total balances including investments.
Those are the numbers to beat, and also why it's so hard to truly innovate in this space.
It's really not at all competitive. A shocking number of places still use a crappy magstripe reader or have a nice new Vodafone terminal but disable NFC (and possibly chip as well). Apple Card only gives you 2% if you can use NFC, Citi gives you 2% even at hotels and airlines that require a card # online, and parks and old gas stations that still just have a magstripe reader. (I've never been to a hotel that took chip or NFC for last-minute bookings, it's always a crappy old magstripe reader built into the keyboard.)
And how do you plan to get the entire Internet where you probably do most of your shopping to switch to Apple Pay? :) Amazon's in no hurry, and that's who gets a disproportionate amount of my spend.
Amazon offers (and I have) a store card that gives 5% cash back. I'd be insane to use Apple Pay there.
Anywhere that uses Stripe can accept Apple Pay, and the same approach from meatspace works in getting people to turn it on - get people to complain because they're missing out on their cash-back.
The competitive options are 2%+ with no annual fee and no requirement to use Apple Pay (but you still retain that option). On this axis it’s strictly better.
- mobile app improvements with effortless freeze/cancellation/card reorder
- great integrations in iOS/macOS
- even the metal credit card that is very similar to how the physical apple card has been described
For now the rewards program I'm works well for me and exceeds what Apple has announced; but Apple's is the next best option. One good thing with Apple Card is that by being in the MasterCard network, it can be good for those places that don't take Amex.
I’m still waiting for anyone to realise that Cambridge Analytica main data source was augmented credit card data (Acxiom mainly), and the subsequent scandal.
Apple has the clout and the PR team to make that happen. They are still going after Facebook but I suspect they’ll go after credit cards soon enough.
> Its rewards program is pretty mediocre, and virtually every Visa/MC/Amex supports Apple Pay seamlessly as is.
Three use cases: card swipes, tap to pay, and Apple purchases.
For card swipe, 1 percent is meh. For tap to pay, 2 percent cashback is about as good as it gets without messing with annual fees. The daily cash back is a mild improvement over other, comparable plans like '1 percent when you're billed, 1 percent when you pay that bill.' For Apple specific purchases, this replaces the Barclay's branded card, and the cash back plan is largely an improvement over the '$25 Apple giftcard' seen previously.
Beyond that, the card is advertised as 'no fees.' Not even for cash advances, late or missed payments. So how do they solve the no-cash-advance fee problem? Can't have cash advance fees if you don't offer cash advances. Hence the rules outlined in the article about cash equivalents.
> 2 percent cashback is about as good as it gets without messing with annual fees.
Citi Double Cash is 2% flat cash back with no annual fee, and BoA has a 2.67% cash back card if you have 100K in assets with them. Cash advances and late or missed payments fees are rare if you keep on top of things, but the spread on cash back hits your wallet every time you use it.
> Citi Double Cash is 2% flat cash back with no annual fee
Citi Double Cash is 1 percent when you swipe, and 1 percent when you pay it off. It's 2 percent, but the delay is like 1-2 months on the second half. As for BoA's assets under management deal, I largely view that as a hidden annual fee. They'll get their pound of flesh somehow.
If these cards are all largely comparable, is it worth switching? For rewards optimizers and churners, likely not. But it's also definitely not worth switching to Double Cash if already have the Apple card and tap to pay regularly, and that's likely what AAPL/GS are banking on. Walk into an Apple store, buy a thousand dollar iPhone on credit, and the sales Genius helps you set up tap to pay with that new card right there.
And daily credit is a double edged sword. 30 bucks a month or whatever you might just apply to the balance, but with a daily trickle it's likely some folks will just dump it into iTunes / the App Store. It's certainly a way to reduce the friction of spending on Apple services. Plus, someone is free to profit from the float of all that cash back money sitting idle. Could be Goldman, could be Apple, could be Green Dot Bank.
> But it's also definitely not worth switching to Double Cash if already have the Apple card and tap to pay regularly, and that's likely what AAPL/GS are banking on. Walk into an Apple store, buy a thousand dollar iPhone on credit, and the sales Genius helps you set up tap to pay with that new card right there.
The argument being made isn't switch from the Apple Card, it's switch to and strictly speaking 2% all the time is better than 2% some of the time, all else being equal, and it pretty much is. Sure, you buy at the Apple Store and you get 2%, though I think less than half the places I regularly shop at, including 100% of the places I buy things online (like Amazon) offer contactless payments.
People find delayed reward motivating, and having the credit trickle in over time instead of daily is actually going to get you to engage with the card more as you redeem the rewards for things of higher perceived value. While what you're saying sounds right on face, human psychology says otherwise :)
The 2.67% back is 40% more cash back, so yeah, transfer 100K worth of assets to a BAML account that you're holding for the long term (and I believe IRAs count), and enjoy. It's a better product.
Well, 3 percent, which is kind of the point here -- you get the Apple card for use with Apple purchases.
> The 2.67% back is 40% more cash back, so yeah, transfer 100K worth of assets to a BAML account that you're holding for the long term (and I believe IRAs count), and enjoy. It's a better product.
Will add it to my list of cards to research, but looking now, it seems like a 75 percent boost to their card offerings, and the 1.5 percent cash back card comes with a 95 dollar annual fee. Is there a different card you were thinking of?
No fees and better UX are the main selling points.
It might shine for foreign transactions: no fee (usually 2%) + 1% cashback seems pretty good. If we're being realistic though, they'll probably have a terrible FX spread.
In the credit card world, "no foreign transaction fees" means, literally, the mid-market rate. If they charge a spread on forex, it's very clearly spelled out in the disclosures as required by law. It's not advertised as a no foreign transaction fee card if they have a forex spread. That's not something they mess around with. No forex fee is pretty much table stakes these days.
Just be careful, if someone in a foreign country offers to bill you in your local currency you literally cannot win. They whack you with a ~10% "convenience" fee and if your issuer charges foreign transaction fees, they'll do that anyways because it's based on point of sale and not based on currency.
> No forex fee is pretty much table stakes these days.
Agreed.
> Just be careful, if someone in a foreign country offers to bill you in your local currency you literally cannot win.
Yep, always take the bill in local currency. ATMs will often try to scare a person into converting, but the rate and fee is almost always much worse than a person's bank.
> ATMs will often try to scare a person into converting, but the rate and fee is almost always much worse than a person's bank.
Not just worse, additive haha. You pay both fees stacked on top. But it's a small price to pay for the peace of mind knowing exactly what your exchange rate is going to be in the moment, if the ATMs are to be believed haha.
It's not even competitive on foreign transactions... There's a whole bunch of cards that give you (at least) 1.5% cash back with no foreign transaction fee or annual fee. Off the top of my head: BoA Travel Rewards, Cap One QuicksilverOne, Navy Federal CashRewards, PayPal MasterCard (2%).
Fidelity Visa gets you 1% cash back on foreign transactions (normal 2%-1% fee)
While forex is set by the network, some cards charge a cross border assessment (CBA) fee on international purchases.
Though admittedly I have 3 cards with no CBA and only that charges a 3.8% CBA... but I did prioritize for cards better for international travel. Most of my friends have cards that do charge a CBA
MC provide a currency conversion rate, yes, but a lot of card issuers also add a foreign transaction fee of some kind on top of that, sometimes both a percentage and a fixed charge.
Generating virtual credit card numbers is kind of a big sell for me. I double any other credit card companies will have anything comparable to Apple's UI/UX of it either.
you can do this with citi and capital one, but yes the UI is terrible. citi requires flash player or an absolutely terrible java desktop app. capital one requires a browser extension
It's my understanding that it will be easier to get an Apple branded credit card than most cards with similar features and rewards.
To get no fees and cash back rewards, a lot of banks make you jump through hoops, have better than average credit, maintain a linked account with a minimum balance, and other things.
Apple also seems to be emphasizing the simplicity of its card, and making it easier to manage than many other cards currently available.
It's not the right card for everyone. But if there was a single "best" card, then there would be only one card, and everyone would have it.
I think I read that if you lose your Apple Credit Card they will issue you a new one automatically in Apple Pay. You'll still get the physical one in the mail later, but if true that's a better UX then what all other cards currently do.
I recently reported a fraudulent transaction on my card. My existing card was invalidated and a new one was on the way. Apple Pay was automatically made aware of this, it said something to the effect of: “Looks like you are getting a replacement card. You can still use this until it arrives.” After it arrived, the number had automatically updated (I didn’t notice exactly when).
In other words, this particular aspect of the UX is already solved.
Depends on the bank. I had to cancel some cards a few months ago and it made them disappear from Apple Pay (with a push notification of course). But I think that might be because I chose the stolen option.
Up, a relatively new digital bank in Australia does this already - I had my card setup in Wallet about 2 minutes after signing up online, a full week before the physical card arrived.
My bank (Bunq) allows me to use offline and online debit cards, for free. Linked to any IBAN (I can have 25 max). The online debit card's CVV code changes every 5 minutes which is convenient enough.
This is a feature of EMV tokenization and not limited to Apple Card. Any card you have in Apple Pay does exactly this, and other issuers have started allowing you to add your card to Apple Pay before you receive the physical one in the mail. As with Apple Card if you report any of these lost or stolen they'll rotate your card's DAN ("Device Account Number").
They aren't "running a [credit] card," Goldman Sachs is the one doing that. The card is merely cobranded so the Apple involvement is limited to it's name/brand and they get a small kickback on card activities. Same if you got a card for a charity, alumni association, or baseball team.
I'm pretty bought into the Apple ecosystem and do almost all my spending via credit card. I feel like I am supposed to be the target market, so what is the selling point?