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Apple launching credit card for smartphone generation

Apple is introducing the Apple Card, which the company hopes will do for credit cards what iPhones did for mobile phones.

The new Apple Card credit card is built into the Apple Wallet app on iPhone, connecting it to the Apple Pay digital payment service and providing users the ability to manage their card on their iPhone. Available in the U.S. this summer, the card will be designed to allow customers to sign up in their iPhone Wallet app in minutes and start using it with Apple Pay in-store or app and online immediately thereafter.

In addition, Apple Card will also provide real-time views of customers’ latest transactions and balance in the Wallet app, with 24/7 support available by sending a text message. By using machine learning and the Apple Maps iPhone feature, the card will label transactions by merchant name and location, and also automatically total and organize purchases by color-coded categories such as food and drink or shopping and entertainment. Users will have access to weekly and monthly spending summaries.

For security, Apple Card will have a unique card number created for each user on their iPhone and stored in the device’s secure element, which is a special security chip used by Apple Pay. In addition, every purchase will be authorized with facial recognition or biometric touch, as well as a one-time unique dynamic security code. The security and privacy architecture is designed to block Apple from knowing where a customer shopped, what they bought, or how much they paid.

In addition to a digital version of Apple Card stored in their Apple Wallet app, users will also receive a physical titanium card to make purchases at locations where Apple Pay is not accepted. The physical card will have no card number, CVV security code, expiration date or signature on the card. Instead, users will retrieve that information from the Apple Wallet app.

Apple is partnering with Goldman Sachs, who is getting involved with consumer credit cards for the first time, and Mastercard. Customers will receive a percentage of every Apple Card purchase amount back as daily cash, which is added to their Apple Cash card each day and can be used immediately for purchases using Apple Pay, to put toward their Apple Card balance or send to friends and family via text.

Daily cash rewards will equal 2% of all Apple Card purchases and 3% of all purchases made directly with Apple for products and services. For purchases made with the titanium Apple Card, customers will get 1% back in daily cash.

Furthermore, Apple plans to charge no fees associated with Apple Card, including no penalty fees for missed or late payments. Customers will be shown various payment options with interest rates calculated. Apple has not specified an interest rate, but said it hopes to offer rates “among the lowest in the industry.”

“Apple Card builds on the tremendous success of Apple Pay and delivers new experiences only possible with the power of iPhone,” said Jennifer Bailey, Apple’s VP of Apple Pay. “Apple Card is designed to help customers lead a healthier financial life, which starts with a better understanding of their spending so they can make smarter choices with their money, transparency to help them understand how much it will cost if they want to pay over time and ways to help them pay down their balance.”

Ted Rossman, industry analyst at, said Apple Card offers advantages to Apple, but the company may have missed an opportunity to maximize their benefits.

“I definitely see why Apple is doing this: they want to juice Apple Pay usage (Crone says PayPal/Venmo has 267 million users vs. 32 million for Apple Pay),” said Rossman. “Plus, as a merchant, they’ll save on interchange fees when Apple Card users buy something from Apple. And as a service provider, they’ll get a cut of Apple Card transactions elsewhere.

“Because this card is so integrated with Apple Pay, you need to be an iPhone user to maximize your benefits,” continued Rossman. “That sounds obvious, but at a time when Apple’s phone market share is declining (from 18% in Q4 2017 to 16% in Q4 2018), it’s a bit surprising to see Apple doubling down here. By contrast, you don’t need to use Uber to get high-end cash back from the Uber Visa Card (notably: 4% at restaurants). Apple could have made a similar push for a broader customer base, but did not.”
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