Apple is entering the credit card business this month with the launch of the first-ever Apple Card. The card works very similarly to other credit cards, with one major difference: It’s tied into the Apple ecosystem.
The Apple Card is a Goldman Sachs-backed credit card that’s issued by Mastercard. This is the same Apple that makes your iPhone, and now, in 2019, Apple is getting into the credit card business. Why?
The reason is obvious: Like everything else Apple does, it’s about selling iPhones. Here’s why:
The physical Apple Card is, essentially, an analog extension of Apple Pay — the service that allows you to connect your debit and credit cards to your iPhone so you can pay for things without getting out your wallet. If you find a place that doesn’t take Apple Pay yet, you now have a titanium etched card.
Regardless of whether or not you want a physical credit card from Apple, the only way to sign up for and use an Apple Card is by owning an iPhone. The only people who can sign up for and use an Apple Card are iPhone owners. Apple isn’t making the credit card to compete with other credit cards: It exists to keep people locked to the iPhone.
The Apple Card within Apple Wallet enables you to track spending, pay the balance, and more. Do you pay for Apple Music? iCloud? Have you ever bought something on iTunes, or on the App Store? Or maybe you’re an iMessage user? These services are foundational to Apple’s ecosystem, and they’re critically important for keeping people locked to the iPhone.
Any iPhone owner who’s ever considered switching to Android has no doubt thought about these services. “But what about all the stuff I bought on the App Store?” you might wonder. That stuff doesn’t come with you to Android — it stays tied to your iOS account — and that might be enough to keep you from making the switch.
What if switching from iPhone to Android meant abandoning a credit card. This is the entire point of the card’s existence. The iPhone costs $1,000, Google sells a $400 competitor, and Samsung has a range of smartphones so there are more reasons than ever to jump from iPhone to Android. Apple is keenly aware of this, and declining iPhone sales confirm it. The Apple Card is a strong move by the company to retain the 900 million-some iPhone users it already has.
The Apple Card is an aspirational luxury item that makes perfect sense for iPhone owners. Why is the Apple Card made of titanium, and why does it have your name laser-etched on its front? Because it’s premium, just like everything else Apple does. The Apple Card is intended to demonstrate wealth. It’s the credit card equivalent of driving a Ferrari, just as having the latest iPhone is the phone equivalent of driving a Ferrari.
For most credit card users, the Apple Card doesn’t really compete with existing credit card programs. Its benefits are meager, and its APR is a relatively standard range. Simply put: There are better credit card options out there. But that’s not really the point of a card like Apple Card, is it?
I have no problem giving credit when credit is due. But giving payment when payment is due is an entirely different thing.