How Apple Card Can Disrupt The Decades-Old Credit Card Industry

Vinay Nair
Jun 16, 2019 · 4 min read

One of the most promising introductions this year from Apple seems to have been the Apple Card, the tech giant’s attempt to make a foray into the finance space.

It seeks to make the credit card experience more secure and user-friendly for all Apple Pay users, while offering some cool kickbacks as well.

We must note that Jennifer Bailey, the Apple VP in charge of Apple Pay, was quite adamant while speaking at a Fortune event that the Apple Card is not an attempt to disrupt the credit cards industry.

Even so, I cannot help but notice some signs that give away that the Apple Card does indeed stand to disrupt the decades-old industry, whether or not the company intends for it to happen.

In fact, Bailey may have her reasons for the spirited denial.

After all, if Apple admits to openly being in contention with banks and financial institutions that usually issue credit cards, it might open itself up to regulatory scrutiny. Since regulation as a financial institution hardly sounds too palatable, Apple is probably better off pretending it does not have anything to do with the space.

Why do I say that Apple Card has the potential to disrupt the credit cards industry?

The credit card market is clearly an overcrowded space starving for some innovation and Apple seems to be giving us just that. Although the product’s underlying technology may not be anything wildly novel, the Apple Card seems to have hit the bullseye with its security and convenience factors.

Issued in association with Mastercard and Goldman Sachs, the Apple Card does not need a physical card to be used. Everything comes at the tip of your fingers, with details saved on your iPhone’s Apple Pay account. Even the Titanium card, the tangible product meant to be swiped at stores not compatible with Apple Pay, is devoid of any physical record of data.

There is no card number, no CVV, no expiry date, and no sensitive details. It is simply a laser-etched card that will give away nothing to a pickpocket or a burglar.

This simple yet ingenious tactic ensures a level of security yet to be matched by established credit card providers. Moreover, the ease of using one’s iPhone app as a credit card adds to their overall convenience. The user-friendly interface stocks up on cool eyeball grabbers, as its AI algorithm promises to identify and display patterns in a user’s spending habits in a bid to aid in efficient money management. While these tricks are nothing but interesting add-ons, the real convenience comes from how easy it makes for the user to get a credit card. No long application processes or hefty fees, the Apple Card is yours when you want it.

The Daily Cash feature of the Apple Card promises a 2% instant cashback upon every use and a 3% cashback on purchasing products from Apple itself. Apple claims that it will keep interest rates “among the lowest in the industry” and promises to not charge international and over-the-limit fees or penalties. Although the cashback rates are not too impressive in such a competitive market, Apple’s fee-less credit card service seems to have earned some major brownie points by giving the usual plethora of penalties and fees a miss.

A few detractors have been quick to claim that the Apple Card is not revolutionary enough to warrant the status of a disruptor. However, I am ready to call the Apple Card a disruptive product for the simple reason that it has dared to usher in the winds of change into the decades-old space.

As JP Morgan Chase and Citi compete with one another to provide exciting sign-on offers and discounts to their credit card users, Apple is subtly effecting a change in how users interact with credit cards in the first place. Making use of the low barrier of entry its Apple Pay connection ensures, the tech giant is taking baby steps in introducing a simple change of habit among credit card users. While the product may not be revolutionary enough for us to stop and stare, the move surely is bold enough to warrant our applause.

Tim Cook foretold that Apple Card will be

“the most significant change in the credit card experience in 50 years.”

That may not be true and the product is unlikely to be as far-reaching as he hopes. However, regardless of its long-term ramifications, it is definitely a stepping stone to some much-needed change.

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