CUPERTINO, Calif.–Apple has unveiled its new Apple Card by calling it the most “significant change in the credit card experience in 50 years.” But what do analysts think now that they’ve had the opportunity to review its features?
As CUToday.info reported here, the new Apple Card is to debut this summer as part of the Apple Wallet. It will include a physical card, as well. Goldman Sachs will be the issuing bank.
But a number of market analysts interviewed by CNN Business say the Apple Card, which has no annual, late or foreign transaction fees, isn’t likely to put a significant dent in the credit card market.
"It's a very full and saturated market," Lisa Ellis, partner at MoffettNathanson and head of its payments, processors and IT services business, told CNN Business. "The question is, what would make people go and get a new card? This is a classic co-brand card.”
User Friendliness a Key
Ellis said the card may get some lift from its instant authorization and if Apple successfully provides a more friendly user experience. The iPhone app shown during an introductory presentation by Apple showed built-in tools for monitoring financial health.
"If consumers really like that, then you could see [interest from] a broader swath of consumers who aren't already zealot Apple Pay users," Ellis said.
Chris Kuiper, an analyst at CFRA Research, said he wasn’t particularly impressed with the rewards available on the new Apple Card. It is offering 3% cash back on Apple purchases, 2% when using Apple Pay and 1% when using the physical card. A number of banks, and even some credit unions, offer more aggressive rewards, especially on travel. Kuiper called Apple’s offer “middle of the road.”
One-Billion Users Will Help
CNN Business said some cardholders may find attractive the additional security offered by the card, as well as the enhanced privacy. Apple announced that neither it nor Goldman Sachs are tracking the transactions, and said the bank has also agreed not to sell or share user data for marketing or ads.
What could make a difference in adoption is the sheer size of the Apple user base, which tops one billion, Max Abramsky, associate analyst at CB Insights, told CNN Business. He noted Apple will load cash rewards onto customers' Apple Cash card, which could keep people in the system even longer.
"Their base is big enough that [it] could still be significant," he said.