Report: Apple to Launch Its Own Credit Card

Posted on February 21, 2019 by Paul Thurrott in Apple, iOS with 36 Comments

A new report claims that Apple is partnering with Goldman Sachs to launch a new credit card that will integrate with iPhone and help customers better manage their money.

Ignoring for a moment the obvious joke about Apple’s customers desperately needing to better manage their money, this coming product actually seems pretty intriguing. And it should appeal to a younger generation of customers that are just now entering the workforce and starting to think about things like tracking spending, savings, and retirement funding.

According to the Wall Street Journal, Apple is rolling out the new credit card to its employees now so that they can test it and the associated new iPhone capabilities in advance of a fall 2019 public launch. The new software-based capabilities will be exposed through the iPhone’s Wallet app, and it will help users set spending goals, track rewards, and manage account balances. I see this is as a move similar to those Apple made previously around health and fitness tracking, but for finances.

This service also makes a lot of sense for an Apple that is reeling after iPhone sales cooled down and is looking to aggressively ramp up its services business. Credit cards are an obvious need for Apple customers, given the firm’s high product prices, and because it’s a premium brand, it’s like that its credit organization will focus on that type of customer as well.

Today, Apple takes a small percentage of every sale that goes through Apple Pay. But the report notes that Apple would take a larger percentage when purchases are made using its own credit card. In effect, allowing it to double-dip on its fees and advance towards its goal of hitting $50 billion in annual services revenues by next year.

The Apple credit card will apparently be a Mastercard-branded instrument and will use that service’s payment network. Cardholders will earn 2 percent cash back on all purchases made with the card, which isn’t particularly notable. But I’m wondering if Apple might offer a higher percentage back for purchases made on the company’s other products. (The report suggests this is possible.)

It’s easy to be cynical about something like this, but come on: An Apple credit card makes sense. And if the firm can do for financial tracking what it did for health and fitness tracking, this will be a win-win.

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Comments (36)

36 responses to “Report: Apple to Launch Its Own Credit Card”

  1. wright_is

    A plain, white card, with rounded edges and a restrained Apple logo in grey in the middle and, apart from the name, otherwise completely blank?

    I can see it having a certain cachet among a certain set of people. And if it can teach them to better look after their money, all the better.

    I was brought up to never buy anything I couldn't pay cash for (a house and the first car to get to work being the exceptions). These days that doesn't seem to be the case, a lot of people seem to pile up credit wherever they can, until it becomes impossible to pay it back.

  2. jbuccola

    Guessing the product offers more benefits when used via Apple Pay (higher cash back or points, for example), hastening more cardless transactions. That's an example of something a traditional bank wouldn't do.

  3. Patrick3D

    The Barclays card available through Apple financing is the best looking card in my wallet, matte black with the bank name written in a slight glossy black font. Beyond that it's just a credit card that earns iTunes gift credit as a reward. I've tried Mint in the past which you provide all of your bank logins to and it attempts to help you track your spending, set goals and so forth but it was never close to 100% accurate.

  4. matsan

    From this side of the Pond, in Sweden where only one of the five major banks has decided to go with Apple Pay, it makes sense. I cannot understand why Apple didn't strike a deal with Visa or MasterCard directly but instead go with the local banks. My guess is because the wring more money out from the local banks instead of the major CC companies.

  5. Daekar

    So lets be clear, this is just a MasterCard used to promote Apple products. Everybody and their brother does this. The only difference is that Apple asked MasterCard to expose its payment history data so they can suck it into Apple databases.

    I'm curious, what do you think is missing from other financial tracking solutions? Both bank and our Visa card already provide this functionality in a very useful format. I can't see Apple actually revolutionizing anything here because it's all already been done. Unless they "invent financial tracking" like they invented everything else....

    • jbuccola

      In reply to Daekar:

      Integrating a card's benefits directly into the payment mechanism reduces at least one friction point (additional apps / statements).

      Watch Samsung do the same thing....

  6. Tony Barrett

    ...and I'm sure Apple will mandate a nice large % cut of every transaction - what better way for them to manage your money!

    • Hoomgar

      In reply to ghostrider:
      That is exactly what struck me about this.  It's just another element in their ecosystem (read: entrapment of customers) to collect even more funds from those who they have already over-charged and locked in.

  7. dcdevito

    I smell desperation

  8. locust infested orchard inc

    Quote in article by Paul Thurrott, "The Apple credit card will apparently be a Mastercard-branded instrument..."

    There are some things money can't buy (e.g. the iNotch eXcess Max). For everything else (plus the iNotches), there's the Apple MasterCard.‡

    ‡Terms and conditions apply, with the typical APR set at an annualised rate of 256%.

  9. Winner

    I wonder if the charging data on the card will be sold to marketers like all other credit cards? So in that way Apple can still market privacy on their iPhone while gaining revenue from card data.

  10. illuminated

    " customers better manage their money".

    Did somebody forgot </sarcasm> ?

  11. donald0

    But will it work with Microsoft Money?

  12. MikeGalos

    Of course they are. It's a way to get yet another cut off the top of people's purchases of 3rd party products.

    What's next? Apple branded payday loans? An Apple lottery?

  13. Chris_Kez

    Will they also pitch some kind of privacy aspect for this, or will Mastercard collect and share your purchase history with it's partners just like any other card? If this reduces my data exhaust I would be interested.

    • BrianEricFord

      In reply to Chris_Kez:

      Hard to say how they’ll handle the straight credit card aspect, but given that they’re closely tying it to Wallet and Apple Pay, they are at least somewhat making a privacy pitch because Apple Pay is promoted for its security.

      One thing they ought to do is increase incentives and rewards for purchases made using this card via Apple Pay.

    • Winner

      In reply to Chris_Kez:

      "Data Exhaust" - I like that term!

  14. Chris_Kez

    Apple is "reeling"? Really? Q4 revenue was $84B (-4.5%) and 2018 revenue was $265B (+16%). I understand the several year trend of flattening unit sales, culminating in a worse than expected quarter (though still their second best ever), has everyone in a tizzy but let's try to maintain some perspective.

    • Hoomgar

      In reply to Chris_Kez:
      I'm no Apple fan by any means but you are spot on.  People have focused so much on how much money Apple "didn't" make in that last quarter but fail to realize two things.
      1.  Flattening of sales happens in pretty much every market.  Some even saturate.  Depends on the product lifecycle.
      2.  They didn't make what they project but they didn't lose money either, they still made a profit.

      I don't get why this is so hard to understand about economics for so many people?

      • MikeGalos

        In reply to Hoomgar:

        The problem is that Apple's traditional business model has been to ride a new device to saturation then downplay it when it commoditizes and the high profit margins start fading. Then they'd pick some new category where there wasn't a dominant player and focus on it until the cycle repeated.

        Apple's problem now is that Macintosh and MacBook and iPhone and iPad and iPod are all in that commodity market now and they're losing share BUT they don't have a new category that they've been able to ramp up. Apple Watch was the plan but it is a slow burn product and doesn't fit that model no matter how they push it. Services don't use that model. And there's nothing else they've been able to "invent" to be their next wave.

        • BrianEricFord

          In reply to MikeGalos:

          There is no way on Earth Apple ever considered Apple Watch to be a new market category to replace what they had from those other divisions, let alone the iPhone, a success story no company (let alone Apple) is likely to recreate anytime soon.

          “Hey, team our iPhone success is in the past. We need to replace that with a new category. I propose we sell an Apple Watch. Also, it’s going to be completely reliant on iPhone.”

          Also worth mentioning that Apple Watch is a billions dollar business that basically IS the smart watch market.

    • provision l-3

      In reply to Chris_Kez:

      Paul likes to mix in some fan fiction to spice up is writing :)

    • locust infested orchard inc

      Quote by Chris_Kez, "Apple is 'reeling'...":

      I believe Paul was extrapolating from several years of historic data, as have been investors with vested interests in the tech sector, with the suggestion a plateau in unit sales will lead to an eventual decline, thereby forcing Apple to hike up unit prices of upcoming models to ensure Cupertino at the very least meet investor expectations. But there is an unquantifiable upper ceiling at which even the most ardent iSheep will not upgrade on an annual basis.

      Should Wall Street earning estimates be missed, as Apple is heavily reliant on sales of their iPhones for company profitability (to be precise, figures from the first quarter of fiscal year 2019, Apple generated 61.66% of its revenue from iPhone sales), it will send AAPL shares sliding, resulting in a fall in Apple's market capitalisation.

      As you correctly point out, in late January, the Q1 2019 fiscal quarter, that includes the all-important 2018 festive shopping season, Apple reported a revenue of $84.3 billion, a decline of ~5% from one year ago. However the major issue was with the 15% decline in revenue from iPhones as compared to the previous year, hence why Apple is "reeling", as it knows the glory days of the iPhones are in the past, hence it's diversification into financial services.

      • BrianEricFord

        In reply to locust infested orchard inc:

        But shouldn’t investor expectations simply shift to meet the new demand?

      • Chris_Kez

        In reply to locust infested orchard inc:

        I think we're at an impasse about what it means for a company or industry to be "reeling". Bookstores and news dealers are reeling. Shopping malls are reeling. Print media and journalism are reeling. The US steel industry is reeling. Apple is... I don't know, facing "long-term headwinds". They're not staggering. They've seen this coming for a while and have been building the services revenue story and strategy for some time. But let's revisit in a year and see if the plan is working, or if there are signs of a precipitous decline in user base or mass defection to Android.

  15. dontbe evil

    apple fans will love to show off their new credit card with a shiny bitten apple logo on it