Short take on Apple Card:

And whether it’s truly a reinvention of a much used payment token everyone wants to experience?

Yesterday, Apple announced with cooperation with Goldman Sachs a credit card product both companies believe are times better than existing experience of similar products.

Based on the words used in the presentation, it is a “reinvention of a card”, as if alluding to the times Apple announced the reinvention of the phone with iPhone. With all my love and respect towards Apple, the card is neither a reinvention nor a major international financial product — but a test of a new service domain.

This is an organic embedding of Goldman Sachs fintech projects capabilities on top of Apple Wallet rails :

Apple will upgrade their Wallet experience, demonstrating instant categorization and payment alerts for the transactions done on the card and present a number of features supported by Goldman Sachs fintechs, Clarity, Final and others, tapping in the liquidity pool they are extending through the Marcus brand (staying hidden in this arrangement) -that is already competing for money with one of the best APR rates in the US.

Reinventing the card in the world of mobile phones, new schemes to place them at the paying and receiving end of the transaction, is something of a misnomer. Where card schemes are trying to maintain their current position and venture in the QR and other means of payment while supporting the original card standards of payment routing, data security — the new schemes are designing their ways around the merchant.

And it is with the merchant and the payment acceptance that Apple has troubles with. A torn fabric of card issuers, processors and ISOs at the receiving end is what slows down the acceptance of secure contactless and NFC — and recent news only support the merchants from barring V/MC payments as they tinker with alternative proxy wallets.

Apple should have been so much better as a proxy if they orient themselves to the merchants and not to the issuer. Why?

Where incumbents would want to leverage the platform, they need fintech capabilities that Goldman Sachs has been investing for years.

Certainly, the situation with real-time payments, instant cash-back calculation, user experience is bad — when you talk about US incumbents, yet one should not generalise and infer from looking at the big companies. They all go for a while back and so rely on crumbling infrastructure and state-by-state regulation, the one that motivated federal banks to come acquiring local players.

Yet there is also a new world — the one that can calculate cash-back daily or even in the moment (this would still depend on speed of transaction clearing) — or propose simple products that take care of user balance, track his credit exposure, mindfully nudge to repay.

They are certainly having their second thought on why would Apple propose a singularly universal way it should be done — and why should a card backed by Goldman Sachs be the one prominently displayed. Some might even call this unfair competition.

Several times Apple built a vibrant and competitive platform where demonstrating your best abilities to convince the user it’s in his/her best interest to select this service capitalising on the user permission to grant access to his data. Here, Apple diminished all others while selecting a major balance sheet lender that has been investing in fintechs for years — and has so implicitly chosen a category leader.

My personal understanding for what might ensue is this: either incumbents would lower their trust in Apple as a platform partner, or this card is a first test, where other banks can also compete and create their Apple cards — and where one can nominate his bank card to become an Apple card.

Innovating around extending an existing financial product through Apple Pay platform and upgrading it with Wallet analytics capabilities, while maintaining user data security is a laudable foray by Apple. Is may be the case that Marcus is just a test — a nudge to the market to follow.

This project is inferior to the art of the possible already enabled by PSD2 in Europe and Open Banking UK

The named innovations that smartly process user data and take control over either payment aggregation and initiation is already happening around the world — often supported either by a dominant e-commerce / merchant driven force like WeChat or Alipay — or stimulated by regulation, where

• Infrastructure is already taking care of static data as the same tokenisation platforms are present — they are not produced by Apple but by the schemes
• User rights is arduously maintained by strong regulation through though payment related acts like SCA-RTS or general regulations like GDPR

Here, one can easily come with a much better UX/UI than that proposed by Apple . The problem is about representing payment the user makes — as all of us, due to fintech competition, decreasing switching costs distribute our spending alongside several instruments — and so having a beautiful visualization for just one card is not enough.

If one looks at the marketing principles of the card, they clearly cater to the US market since most things about privacy and ubiquity of making a mobile payment have been solved — while the US is still lagging in them. This is a representation of a local ambition of both companies behind the announcement.

It starts a new race — late-stage fintech projects becoming part of platforms where they can build one themselves.

Clearly this is just a new step for Apple: to try and leverage the connection with hundreds of millions of users — to allow them consume 3rd party services under Apple control — without compromising their data rights.

It will tilt the incumbents to offer their own Apple Cards — and potentially for merchants to follow with their undstanding on what the best use-case for them and their customers should be.

In general, access to the distribution channel like Apple — would make late-stage B2C projects willing to collaborate with incumbents, CAC is the common denominator separating winners from everyone else.