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“Built on simplicity, transparency and privacy, and designed to help customers lead a healthier financial life” reads the opening of the Apple press release unveiling its new credit card.
The card, which is supported by Mastercard and Goldman Sachs, will link up with Apple Wallet, allowing near instant set up and go according to the press release.
Key features include daily cashback of 2%, no fees, lower interest and real-time assessment of interest payment, recency, frequency and monetary (RFM) tracking.
While it was hailed as “an uber moment for retail financial services” and “a personal financial manager on steroids” in emailed comments from Capgemini’s EVP of banking and capital markets, Sankar Krishnan, other market participants are not convinced.
“The bare bones concept of the Apple Card is extremely similar to other credit card or financial products,” said Meenaz Sunderji, SVP of partner growth at Zafin, the banking software company.
Likewise, head of banking products at Tandem, the UK credit card challenger, Sven Schindele is skeptical.
“While it is being positioned as one of the biggest innovations in credit cards in 50 years, I think this is an overstatement,” said Schindele. “The fact they don’t have the card details on the physical card is novel but I would suspect this will become more common as digital wallets really hit the mainstream.”
Dean Wallace, practice lead of real-time and digital payments at payment technology vendor ACI Worldwide is not surprised to see a big tech company coming into the financial services ring pioneering cardless accounts.
“We are seeing the emergence of non-plastic payment form factors globally and the tech giants are stepping in. In India for example, the likes of Google and Facebook are partnering with the local banks to put account to account payments capabilities into their mobile apps. They’re seeing enormous growth and we anticipate increased tech giant involvement in payments globally,” said Wallace.
Sunderji also believes that Apple can take advantage of increased consumer demand for a technically elegant experience.
“As customers continue to drive demand for more elegant, tailored financial services, big technology companies are attempting to step in and lure customers away” he said. “Operating on lower overhead costs, tech companies are able to lure customers away with lucrative offers and new products and services that can be seamlessly integrated into the devices customers already own.”
Sunderji is also skeptical of the no fee policy advertised by Apple, pointing to terms and conditions that state, ‘late or missed payments will result in additional interest accumulating toward your balance.’
“These terms alone make the Apple Card another form of a monetary charge based on customer behavior that links back to the traditional fees a bank would charge under their credit cards,” he said.
Tandem’s Schindele too believes that the ability to pair financial services to wider customer experiences, like Apple Maps, makes it a compelling proposition, and while attractive in the US, would struggle to have as much an impact across the pond.
“I don’t think the perks on offer when the Apple Card launches in the UK will be in line with this US version, for example 2% cashback, would be unsustainable in the UK market where interchange income is limited by regulation to 0.3%,” he said.
I think this is a global phased roll out. UK customers will also be able to benefit from the ability to plan for a spend, pay for a spend and customize their financial health and wellness to their ability to pay and willingness to pay thereby reducing risks associated with living dangerously from a spend perspective with a lot of early warning. The beauty of this is that you can look at your financial health by the second so you see a Statutory warning to one’s financial health at all times.
Instead of lambasting Apple for a “glorified new card”, Sunderji believes this launch will still has profound consequences on the industry.
“Instead,” he said “the [financial industry] should be focused on the future impact Apple could have in the market. The industry has seen time over time that it’s not about the hottest offer, the best reward or stellar product. Rather the most successful companies operate on a customer-centric, holistic approach. The banks that continue to offer those types of services won’t have to worry about big tech giants, like Apple, continuing to make waves within the financial services market.”
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