Apple Is Launching Its Own Credit Card and Here are Five Business Lessons to Learn from this Move

Innovation at its best. Apple is releasing its own credit card with cash back rewards

Posted by: Nicky Verd Comments: 0

Later this year, Apple is releasing its own credit card with cash back rewards.  The card will heavily integrate with the iPhone and the company has named it the Apple Card. The actual card is minimalist and sleek in the most Apple kind of way. No late fee, no annual fee, no over the limit fee, no card number, no signature, no expiration date, no CVC number, no barcode. This is innovation at its best. To put it bluntly, Apple is selling Air and people are literally falling over themselves in anticipation to signup for this historical credit card.

Cardholders will be able to set spending goals, track rewards on purchases and manage their own account balances.

Apple’s credit card is created to “help customers lead a healthier financial life. The Apple Card is built into the Apple Wallet app on iPhone, offering customers a familiar experience with Apple Pay and the ability to manage their card right on iPhone,” said the company.

The company also said it will provide interest rates that are among the lowest in the industry. In addition to no fees, the card offers smart functionality.

 “Apple Card uses machine learning and Apple Maps to clearly label transactions with merchant names and locations. Purchases are automatically totalled and organised by colour-coded categories such as Food and Drinks,” said Apple. Weekly and monthly spending reports are also provided with Apple Card.

In regards to security, Apple said it has partnered with Goldman Sachs and Mastercard to provide the support required to issue the card, and for it to be accepted by global payment networks. It also features unique security measures, which include a unique card number which is stored on the user’s iPhone.

“Every purchase is secure because it is authorised with Face ID or Touch ID, and a one-time unique dynamic security code. The unique security and privacy architecture created for Apple Card means Apple doesn’t know where a customer shopped, what they bought, or how much they paid. With no card number, CVV security code, expiration date, or signature on the card, Apple Card is more secure than any other physical credit card,” said Apple.

Apple further says “The unique security and privacy architecture created for Apple Card means Apple doesn’t know where a customer shopped, what they bought, or how much they paid.”

This simply means transactions will be done on the device, not on Apple’s servers. Transactions will be done locally and encrypted before it reaches the bank. Also, Apple has specific circuitry built into every iPhone to store secure information on the phone that never leaves the phone such as the security ID and fingerprint data. Apple titanium coloured card has a chip with the customer’s name on the chip. Apple Card is void of numbers and other data that can be used by smart criminals.

I suppose all banks will soon follow suit in removing too much personal info from their cards as well. It is said, the Apple Card will be available to US customers in summer of 2019.

Apple has been around for over 40 years wowing their customers’ every time and it’s sitting as the largest cash-reserves in the history of business in terms of market cap. The following business lessons can be learned from Apple Inc:

  1. Finding Innovative Ways to Stay Relevant in the Market Place

One of Apple secret sauce is identifying virgin and untapped segments of the market, especially in the service and e-commerce sector. People are no longer changing phones and hardware like they used to. Hardware Company’s like apple need to innovate, and become more of a service orientated company. Providing the hardware, but also providing more of a service for use with the hardware. That’s the only way to stay relevant in business in the 21st century. Apple was started out with computers desktops and laptops. Then they branched into media players, phones, phone accessories, etc. They also built a business creating software and other media for these devices, stuff that some companies might have delegated or licensed out. 

2. Stepping into Uncharted Territory

There are still many unknowns regarding Apple Card, but it’s safe to say this is uncharted territory for this innovative company, though this isn’t exactly Apple’s first move in a financial service/product. While it already dipped into finance with Apple Pay Cash, it’s now providing the same kind of service you’d expect from a bank, not a tech giant and this is what innovation is all about. Tech companies are muscling in on banks as digitization expands its influence and more people are going cashless.

3. Leveraging on Existing Customers

Apple already has a billion users, most who can be considered affluent due to the price of the products. In marketing it’s cheaper to grow an existing customer, that to acquire a new one. Hence it is better to leverage on existing customer base rather than starting a brand new company with zero customers, spending billions of dollars to establish the brand locally and internationally, spend billions more to acquire customers and spend still more every year maintaining that customer base. What Apple is doing by collaborating and branching into the financial segment makes perfect sense. They already have a billion qualified leads, iPhone users to be specific. This is an already warm market and only needs a few marketing tweaks and direct communication to sell the credit card. Initially Apple took a small cut with Apple Pay Cash, now it’s trying to take the whole pie by offering a credit card. This makes complete sense and should have been expected by any future thinking person. Next could be healthcare where Apple leverages on Apple Watch as a way to enjoy lower premiums for staying healthy. Insurance companies are already doing this and it’d still be a big win for everyone if Apple decides to collaborate and step into healthcare.

4. Giving Customers a Delightful Experience

Business is about solving people’s problems and Apple is always expanding into these areas that take advantage of their strengths in relation to people’s lives and needs. When people started using computers for music and movies, Apple got in. When connected mobile devices took off, Apple got in. When cashless payment became mobile, Apple also got in. And with the rise in cashless transactions and ecommerce, Apple is also getting in with a credit card. In today’s digital pace world, every business should try to minimize friction points as much as possible by offering a simplistic and a delightful digital experience and Apple is doing just that.

5. Attract New Customers

The launch of Apple’s credit card will give people more reason to buy Apple’s products. Yes, that’s the point of the card. To appeal to non-iPhone users. If you want the card, you will need an iPhone. As mentioned already, hardware sales are declining and as an innovative company, they have to find other more service-oriented ways to thrive as well as make money.

By Nicky Verd
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