Apple's new no-fee credit card is an aggressive move to control more of your digital life and keep you from switching to Android
- Apple Card, Apple's new credit card, is going to appeal to a lot of users, thanks to the fact that it promises no fees, better security, and 2% cash back on most purchases, paid out to users daily.
- It's another new business line for Apple, as it looks for ways to generate more revenue from each of its users.
- Consider also that it's a move that wards against iPhone users switching to Android: It's enough of a pain to ditch iMessage and its blue bubbles; can you imagine having to cancel your credit card, too?
- Conversely, Apple is offering a higher 3% cash back rate on purchases directly from the company, including iCloud, Apple Music, the App Store, and even new iPhones and Macs - giving a strong incentive for users to stick around.
In a lot of ways, Apple is the new Microsoft: Where Windows once informed every single decision made by Microsoft, so too does Apple make protecting its flattening iPhone business its first priority.
Take, for example, Apple's much-vaunted push into services, which took center stage at an event on its Apple Park campus on Monday morning. New services like Apple Arcade, Apple News Plus, and Apple TV Plus are all slated to run first, and best, on iPhone or Mac, helping the company squeeze more revenue from every Apple user in the world.And then, there's Apple Card, the new credit card offered in conjunction with Goldman Sachs, designed to work with Apple Pay. Apart from the obvious profits it stands to make from just getting into the credit card business, the launch of this card is an intriguing move that hints at how Apple views the state of the smartphone business.
If you're feeling charitable, you could reasonably make the argument that Apple is just doing what it always does: taking something that already exists, and making it better. Credit cards, generally speaking, are pretty bad; Apple's no-fee, instant-rewards, security-focused alternative seems to be at least a little more humane - on paper, anyway.
The other way of looking at it is that this is a shrewd business move for Apple. Not only does the company get a toe-hold in the lucrative financial services market, but it also makes it that much less appealing to switch from an iPhone to Android. Its one thing to lose the vaunted blue text bubbles that come with Apple's iMessage, but can you imagine having to cancel your credit card just because you bought a new phone?
What Apple gets
The truth is probably somewhere in the middle; anecdotally, at least some people seem really excited about the prospect of the Apple Card. It's likely to see considerable uptake, too, given that Apple is likely to heavily promote it to iPhone users once it's available later this year.
At the same time, it's worth really considering what Apple gets out all of this. Note that while Apple Card promises 2% cash back rewards on most purchases, paid out to users on a daily basis, that goes up to 3% for purchases made directly from Apple itself. That means a blanket discount for Apple iCloud, Apple Music, App Store purchases, or even a new Mac or iPhone.So if the hassle of switching is the stick, that amped-up cash-back reward is the carrot. Taken together, they form a very clear picture: With Apple Card, you get rewarded for diving deeper into Apple's whole ecosystem of products and services, while simultaneously making it that much harder to leave. That's important in a world where it gets harder to justify paying the rising price of an iPhone, even as midrange Android phones look to be just fine for most people.
It's not completely dissimilar from what Facebook is doing, amid Mark Zuckerberg's grand pivot to private messaging among small groups.
By focusing on direct messages and commerce, Facebook is slowly positioning itself as the middleman between you and the real world - across both your social life and your daily spending habits. In so doing, it makes it way more convenient to use Facebook, and therefore that much harder to stop using it, which is a real concern for the social network in a post-Cambridge Analytica world.
In any case, the Apple Card may be a good and worthwhile opportunity for anybody who finds its benefits appealing. But consider that there ain't no such thing as a free lunch, no matter how much cash you get back from your daily sandwich run, and this convenience has the hidden cost of giving Apple more power over your digital life.
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