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The announcement of the Apple credit card has generated much excitement, but the company is offering few perks that cannot be found in the UK market already.
Apple chief executive Tim Cook said the launch would be the most significant change to the credit card market “in 50 years”. The card will be available in America this summer, with a UK launch expected to follow.
But will it really be so revolutionary? A closer look at its features suggests that Apple may find it difficult to convince customers to switch away from well-established rivals.
Whether it is the concierge-like service offered by American Express, earning Avios rewards with British Airways-branded cards or collecting Nectar and Clubcard points with Sainsbury’s and Tesco, the credit card market is highly competitive.
Virgin Money and Sainsbury’s Bank will even offer customers 28 months of interest-free spending, something Apple is unlikely to match.
Many of Apple’s "innovations" have already been seen before. The Apple Pay app will let customers track their daily spending, but this has been offered by digital banks such as Monzo and Starling for some time. Even the flashy metal card is already available through another challenger brand, Revolut.
Offering no annual fees or charges for international spending is useful for those travelling abroad, but again there are multiple cards that already offer this perk.
So what is good about the card? Its security features should be a major selling point. The card itself will have no expiry date, CVV security code or even card number, meaning it will be more difficult for fraudsters to go on a spending spree if the card is ever lost or stolen.
But the real standout feature is the rewards given to users.
The card will offer 3pc cashback when a customer buys Apple products, 2pc on other purchases through the Apple Pay app and 1pc when using the physical card. It is not known whether the same rewards would apply to UK customers, but this level of cashback would make it one of the most competitive in the market.
Apple’s card will be launched in partnership with Goldman Sachs, which has made a good impression in the savings market with its own Marcus account, and MasterCard. Partnering with firms of this pedigree should minimise the risk of teething problems.
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But other important facts are unknown. What interest rate will Apple charge to customers? Will it be able to offer the same high quality service that customers are used to with its technology products?
American Express, which will likely been seen as Apple’s major rival, is able to offer a premium service to account holders by charging a large processing fee to shops and restaurants, something which leads to many retailers declining the card altogether. How will Apple look to recoup its costs from customers?
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