Who is the Apple Card for?

On March 25, the Apple Card was announced. If it wasn’t obvious before, Apple is getting deeper and deeper into the services business due to slowing hardware sales. With most credit card companies making money through fees (rather than interest), it’s a great vertical with relatively low churn for Apple to break into.

But who exactly is this card aimed for?

My first guess are millennials. The titanium physical card is a delightful touch and as we’ve seen from the trend of metal cards, a titanium card will definitely be a selling point for some people as a status symbol. But will it be enough to achieve critical mass for Apple?

The big miss that I think will deter a lot of users is a lack of sign-up bonus and good cash back. 1% on all purchases, 2% on purchases with Apple Pay, 3% on any Apple store purchase. If Apple Pay was accepted in more places, this would be a much better cashback structure. But there’s barely any places that accept Apple Pay, the ones that stand out are Safeway and Starbucks. This will detract a lot credit card nerds, including me. But I’d argue this group of people is relatively small.

So who do I think this card is really for? The average person who probably doesn’t understand or distrusts credit cards. There are plenty of people who avoid credit cards because they don’t understand complicated interest and payment schedules. With the branding of Apple and simplicity at the forefront, users may be more trusting.

The real killer feature: being able to easily apply for the Apple Card right on your iPhone. Apple has about 1 Billion active iPhones. That’s a lot to of people to target with notifications and marketing material to seamlessly apply for a credit card. All you need to enter is your social security number! The barrier to entry will be as minimal as possible and if I had to guess, Apple will make the sign-up experience seem less daunting, like you’re just registering for any other app / service.

But what about after the sign-up experience? Doesn’t consistent usage matter too?

Apple’s marketing material promotes “spending management” features, such as spending tracking and charge location tracking. To be totally fair, the spending tracking feature actually looks like a good feature and I wish was something offered on all credit cards(note: there are already services like Mint that offer this). One thing to remember is if you’re a user of Apple Card and you’re bad at managing your spending, you’re incentivized to put all your purchases on the Apple Card to truly understand your spending habits. If you split costs across multiple cards, Apple Card will only paint a partial picture of your habits. I imagine this will be a big feature for users who want to rein in their spending and will see the Apple Card as a tracker for “everyday spending”.

One very telling piece of marketing is their focus on fees (or lack thereof) and security. Apple is boasting they have no “fees” (interest for partial monthly payments is not considered a fee) and to be fair, they have great visuals to help you understand interest. If I was a new user, this emphasis on visuals rather than cold, hard numbers would not only attract trust but usability in the Apple Card. No need for calculations, just look at the colors!

The focus on security is also a great feature but for most current credit card users, it’s a rare occurrence. A delightful security is feature is a dynamic CVV number that’s generated right on your iPhone. Obviously much harder to steal your card number now (impossible?) but adds slight friction in your online buying habits now when you have to pull out your phone to get a new CVV number.

Overall, the Apple Card is an interesting divergence from the high end credit cards with high annual fees and lofty cash backs. It’s a simple card that I think will be a great “beginner” card for those without credit cards or deep knowledge. It will be interesting to see how big banks respond to this card (if at all). I predict we’ll see more lower end cards that eschew advertising cash back for simplicity and strong customer-centric ideals.