LONDON–Another analyst sees challenges ahead for Apple as it rolls out its new Apple Card.
Ruomeng Wang, research and analysis manager with IHS Markit, said the new Apple Card, which will be embedded in the Wallet App on iPhones following approval, and will also include a physical card issued by Goldman Sachs (with payments processed by MasterCard), said IHS Markit is projecting addressable devices for Apple Pay in the U.S. will increase to 175 million by the end of 2019.
“The launch of Apple Card will help Apple Pay reach and acquire new customers, while offering additional payments flexibility for existing Apple Pay users,” wrote Wang. “To attract customers onboard, Apple Card offers the card with no annual fees, lower interest and other incentives. However, existing Apple Pay users are a group with high credit card penetration, so there will be challenges when it comes to convincing them to add another credit card without providing competitive incentives. Compared to other credit cards, Apple's incentives are relatively limited.”
Turning Elsewhere
With comparatively limited incentives, Apple Card may turn to security and monitoring features, to add value and differentiate this card from others, according to Wang.
“Apple Card's titanium version has no visible numbers, which protects the card from unwarranted use, if it’s lost or stolen,” wrote Wang. “Apple Card will also integrate with Apple Maps, providing users with more meaningful transaction details on their payment summaries. Such detail facilitates the monitoring of spending, allowing users to more easily track their purchasing activity.”
Where Apple is Focused
Wang said the features and incentives offered by Apple Card indicate that Apple is focusing on leveraging its own ecosystem, using payments to add value to its existing products and services, including:
- Apple Maps: Apple Card uses machine learning and Apple Maps, to clearly label transactions with merchant names and locations
- Apple Pay: Apple Card will be integrated with Apple Pay, enabling customers to manage their spending and card details
- Apple devices, iCloud and other digital contents – Apple Card offers daily cash, to reward customers when they buy Apple products online, in-store and in-app
A Different Strategy
“The current direction for payments and consumer banking companies is to move away from payments-only services. For example, Alipay, WeChat and other over-the-top (OTT) companies, as well as challenger banks Revolut and Monzo, are all looking at ways to diversify their services,” wrote Wang. “Apple has adopted a different strategy, with payments focused on the Apple Card, which highlights Apple's intention to strengthen its own ecosystem, instead of getting involved in wider financial service offerings.”