Apple Card: 10 key takeaways

Apple's new credit card isn't just another virtual card in its virtual wallet. It borrows a lot of features from the most successful brands in payments and technology.

It also builds on the security practices and user experience consumers are familiar with in Apple Pay. Not everyone will flock to Apple for their financial needs — Apple's options for nondigital payments are somewhat limited — but the Apple Card brings together several concepts that consumers have only been able to get piecemeal from other card accounts.

This story was originally published March 26, 2019, and has been updated with new information following Apple Card's launch. It was compiled from reporting by PaymentsSource writers including John Adams, Kate Fitzgerald, David Heun, Michael Moeser and Daniel Wolfe.

Other banks can use Apple Card's tech
Reid-Chris-Mastercard-ps
The Apple Card takes a more aggressively digital approach to credit card relationships than most other products on the market — but the technology behind it isn’t exclusive to Apple.

Following about 18 months of secretive development with Apple and Goldman Sachs, Mastercard was able to bring the same offering to other issuers. Its platform carries over many of the features that Apple Card users will get, according to Chris Reid, Mastercard’s executive vice president of cyber intelligence and data services for North America. Reid spoke at SourceMedia’s annual Card Forum in May.

“This is digital first. This is, all card details are only available in the digital environment,” Reid said. “Yes it comes with a physical card if you want it — if the consumer wants it — but in that physical card, it’s not going to carry the 16-digit PAN, it’s not going to carry the CVC, it doesn’t need to carry the customer service number or the expiry date.”

Reid attributed that to the secrecy surrounding the platform’s development under Apple’s strict nondisclosure agreements. Any bank that wants to launch a card on this platform can do so in six months, he said.
AirPod-like activation
Airpods announcement
Philip "Phil" Schiller, senior vice president of worldwide marketing at Apple Inc., unveils the AirPods headphones during an event in San Francisco, California, U.S., on Wednesday, Sept. 7, 2016. Apple Inc. unveiled new iPhone models Wednesday, featuring a water-resistant design, upgraded camera system and faster processor, betting that after six annual iterations it can still make improvements enticing enough to lure buyers to their next upgrade. Photographer: David Paul Morris/Bloomberg
Activating a new credit card has always been a point of friction. Apple seems to have borrowed an idea from how modern Bluetooth headphones pair.

Customers who opt for a physical card can pair it using NFC, much like users of Apple's AirPods can activate them by holding them near an iPhone or iPad. The titanium Apple Card contains no NFC chip, so the pairing occurs with a chip contained in the card's disposable packaging, according to an Apple video demonstrating the process.

Apple eschewed NFC in the card itself to encourage users to conduct contactless payments with their phone or their watch, but the activation process also underscores Apple’s device-centric focus for managing spending and bill payment.
Apple Card hype didn't take a bite out of Apple Pay
Apple pay sticker
A sign for the launch of the Apple pay system, from Apple.Inc is seen displayed at the entrance to a McDonald's Corp. restaurant in London, U.K., on Tuesday, July 14, 2015. Apple Inc. is making the U.K. the first market outside the U.S. for its digital-wallet system as the company fights for a place in the electronic-payments industry. Photographer: Chris Ratcliffe/Bloomberg
Apple's fans may be eager to apply for its new card, but they didn't stop using other cards in Apple Pay.

The Apple Pay business, which is distinct from the Apple Card, grew in Apple's third quarter due to a combination of new market launches, new customer sign ups and increases in usage, Apple announced in July.

“Apple Pay is now completing nearly 1 billion transactions per month," Tim Cook, Apple's CEO, said during a conference call to discuss its earnings. "Apple Pay is now adding more monthly users than PayPal is doing. In China, Apple Pay launched the card for DiDi, the world’s largest ride hailing app."
Banks are the bad guys
Jennifer Bailey presents Apple Card
Jennifer Bailey, vice president at Apple Inc., speaks during an event at the Steve Jobs Theater in Cupertino, California, U.S., on Monday, March 25, 2019. The company is unveiling streaming video and news subscriptions, key parts of Apple's push to transform itself into a leading digital services provider. Photographer: David Paul Morris/Bloomberg
Apple isn't the first to adopt a consumer-friendly marketing message for a credit card, but it may have found a way to hold the moral high ground.

In addition to listing the many fees Apple doesn't charge — application fees, late fees, over-limit fees, etc. — Apple has software that lets consumers track their spending, monitor their interest rates and prepay their monthly bills.

Most notably, in picking Goldman Sachs as its issuer, Apple is starting with a clean slate. Goldman doesn't offer a consumer product like this, so it doesn't carry the baggage that other issuers might have — nor the need to harvest consumer data.

"Apple doesn't know what you bought, where you bought it or how much you paid for it. … Goldman Sachs will never share or sell your data to third parties for marketing and advertising," Jennifer Bailey, vice president of Apple Pay, said in Apple's presentation.
There's an app for that … card application
Jennifer Bailey presents Apple Card
Jennifer Bailey, vice president at Apple Inc., speaks during an event at the Steve Jobs Theater in Cupertino, California, U.S., on Monday, March 25, 2019. The company is unveiling streaming video and news subscriptions, key parts of Apple's push to transform itself into a leading digital services provider. Photographer: David Paul Morris/Bloomberg
The Apple Card experience begins in the Wallet app, eliminating the need to fill out an application or load a plastic card. It's a different take on account application, but it's not the first.

Barclaycard's Uber card is opened and managed the same way. Stemming from a 2017 pact between Barclays and Uber, the card lets users apply for and manage the card from within Uber's app. This process gives Uber a crucial advantage it doesn't get if users simply linked its app to Apple Pay: It gains visibility into the user and owns that customer relationship.

Just like the Uber card, the Apple card approves applicants in minutes. The process is likely streamlined by the information Apple already has access to about its customers.
Rewards that drive digital spending
Jennifer Bailey presents Apple Card
Jennifer Bailey, vice president at Apple Inc., speaks during an event at the Steve Jobs Theater in Cupertino, California, U.S., on Monday, March 25, 2019. The company is unveiling streaming video and news subscriptions, key parts of Apple's push to transform itself into a leading digital services provider. Photographer: David Paul Morris/Bloomberg
Apple Card's reward structure is designed to promote digital spending over the use of a physical card. Users get 3% cash back for purchases within the Apple ecosystem, 2% for other purchases made via Apple Pay and just 1 percent for purchases made with Apple's physical card.

It's not unheard of to drive digital spending this way. Samsung Pay has long offered rewards for using its mobile wallet by suggesting users were double dipping — they'd get rewards from both Samsung and their issuer.

Chase has made similar moves in the past, with its rotating rewards for the Chase Freedom card. In late 2017, Chase announced it would let users earn extra rewards when they spend from a mobile wallet; the offer applied to any wallet loaded with the Chase card, rather than forcing consumers into its own Chase Pay app.
The prestige of metal
Tim Cook presents Apple Card
Tim Cook, chief executive officer of Apple Inc., speaks during an event at the Steve Jobs Theater in Cupertino, California, U.S., on Monday, March 25, 2019. The company is unveiling streaming video and news subscriptions, key parts of Apple's push to transform itself into a leading digital services provider. Photographer: David Paul Morris/Bloomberg
Apple boasts that its mobile wallet is accepted by 70 % of merchants in the U.S., with higher penetration in Canada, the U.K., Russia and other markets — reaching an impressive 99% penetration in Australia. That still leaves many merchants that insist on accepting plastic.

Or, in Apple's case, titanium.

Card issuers have long struggled to make their card the top-of-wallet choice, and often this means making their cards out of more impressive materials such as metal. Other issuers use colored cores to make their cards stand out when tucked into the pocket of a wallet; and others have scented cards or ones with built-in screens and compasses.

Apple already makes many of its devices out of metal, so the card fits its own branding as much as it falls in line with a trend in card payments.
Built on an already successful platform
Tim Cook presents Apple Card
Tim Cook, chief executive officer of Apple Inc., speaks during an event at the Steve Jobs Theater in Cupertino, California, U.S., on Monday, March 25, 2019. The company is unveiling streaming video and news subscriptions, key parts of Apple's push to transform itself into a leading digital services provider. Photographer: David Paul Morris/Bloomberg
The main features of Apple Card are built into the iPhone itself, but they spread beyond the Wallet app.

Rewards are delivered on the Apple Cash card, and customer support is handled through iMessage. This is similar to how Starbucks built the success of its own mobile payment app — by tying into the rewards and payment platform that drove its wildly successful Starbucks gift cards.

"If you have a question" about Apple Card, "just text us right from Messages … it's as easy as messaging a friend," Bailey said.
Making rewards easier to spend
Jennifer Bailey presents Apple Card
Jennifer Bailey, vice president at Apple Inc., speaks during an event at the Steve Jobs Theater in Cupertino, California, U.S., on Monday, March 25, 2019. The company is unveiling streaming video and news subscriptions, key parts of Apple's push to transform itself into a leading digital services provider. Photographer: David Paul Morris/Bloomberg
A longstanding challenge in credit card rewards is convincing users to spend the points they've earned. Apple's answer is to simply give cash back to a stored-value account and let the users decide whether to apply that to their Apple Card statements, spend it directly or send it as a P2P payment.

Those options build on the efforts of other card issuers and retailers such as Amazon, which lets customers of some card issuers spend their points directly on the checkout page.
Doing more with mobile security
Tim Cook presents Apple Card
Tim Cook, chief executive officer of Apple Inc., speaks during an event at the Steve Jobs Theater in Cupertino, California, U.S., on Monday, March 25, 2019. The company is unveiling streaming video and news subscriptions, key parts of Apple's push to transform itself into a leading digital services provider. Photographer: David Paul Morris/Bloomberg
Apple Pay has always had security baked in, and that applies to the Apple Card as well. Not only does the Apple Card use the same secure element and dynamic data used for Apple Pay transactions — the card number itself is different from device to device.

The titanium card is also designed to limit exposure to theft; it has the user's name etched on it, but doesn't have a printed account number, CVV, expiration date or signature.

"If you ever need that information, it's in the wallet app," Bailey noted.
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