Fintech, and especially payments, have been a hotbed of activity in recent years with start-up challenger banks looking to shake up this notoriously conservative and risk averse sector of the economy.
We’ve already seen a raft of app-based banks offering a wide range of innovative, user-friendly functionality. These branch-free banks include Starling, Monzo and Revolut, all of which take just minutes to open an account on a smartphone and offer real-time notifications when you make a payment, give insights into your spending habits, allow you to set money aside in ‘pots’, enable you to set spending goals, and can also round purchases up to the next pound with the extra going into a savings ‘pot’.
The beauty of these app-based challenger banks is that they’re born in a smartphone format and completely app optimised – something the traditional banks have been struggling with for years.
Leveraging Apple’s massive customer base
Now, however, this summer, Apple is looking to take a bite out of the US next-gen banking market with its own app-based Apple credit card.
Faced with softening iPhone sales (down by 2% last year) the smartphone giant has decided to leverage its massive customer base and financial muscle to launch the Apple Card which offers much of the same payment experience as Apple Pay.
The new payment method, backed by Mastercard and Goldman Sachs, is no respecter of tradition. There is no number on the front or the back, no CCV and certainly no signature. All of the security credentials are encoded in the Apple Wallet within the user’s phone and protected by biometrics, so nobody can copy it. If you lose your phone your can immediately cancel your card and request a new one via Wallet.
Promise of greater security
Customers will also get a swish physical Titanium card for the 15% of UK transactions that cannot be carried out contactless by smartphone.
Apple stresses that it cannot access personal spending data and it aims to give consumers greater control, privacy and transparency when it comes to their payments. The computing giant says its Apple Card is designed to make a healthier financial lifestyle more achievable.
The new card gives customers an easy-to-understand, real-time view of their latest transactions on their smartphone. The Apple Card app neatly brings together technology such as artificial intelligence and Apple Maps to clearly label transactions with merchant names and tag payment locations on a map. Payments are then colour coded and organised by expense type (such as food and drink, shopping and entertainment) so that consumers have a better idea of how, when and where they spend their money and also helping them to spot suspicious activity.
Cash back on every purchase
The company says it has simplified the traditional credit card application process, eliminated fees, made it easier to pay less interest and offers a new level of security and privacy.
To incentivise Apple customers to switch to the new credit card, the firm is offering US customers 2% cash back for every transaction and 3% if the purchases are made at Apple Stores or its App Store.
It’s true that much of the functionality and slick UX baked into Apple’s new credit card is already offered by a small group of fintech challengers, but as we’ve seen before, Apple is expert at taking great ideas and making them exceptional.
Will we see a launch of Apple Credit in the UK any time soon? The UK adoption of contactless and associated payments/fintech is far more advanced than in the US, so it would be surprising if we didn’t.
Will competitors such as Amazon follow suit anytime soon? It’s certainly not inconceivable. A recent study showed that 65% of US Amazon Prime subscribers were definitely open to the idea. So watch this space!