“Apple Card” or Apple safety net ?

To fully understand Apple’s decision to enter the fintech market with its new smart credit card; we must first take a look at the company situation. iPhone sales are collapsing. After getting the 2019 second-quarter results, the numbers are crystal clear, people are buying fewer iPhones and the competition is thriving. 

If we compare it to last year’s phones shipments: Samsung (ranked 1st) grew 7,1%, Huawei (ranked 2nd) grew 4,6 %as Apple (ranked 3rd) fell 11,9%

Other than Samsung, the competition comes from Huawei and Xiaomi. Xiaomi (+44 %annual growth, 4th worldwide in market share) is dangerously closing the gap with Apple for third in the amount of sold smartphones. These competitors are forcing the prestigious Californian tech giant to come up with a new solution to keep customers satisfied. Apple had no choice but to expand their brand and not only offer products but now services.

“Apple Card”, along with the new upcoming streaming service, “Apple TV”, is the answer that will maintain the company at the top.

What is the Apple Card?

According to Apple, it is “the smartest credit card ever”…

Now available for American customers and issued by Goldman Sachs Bank U.S.A., it is connected to the “Apple Wallet”, as it provides users with quite advanced features unseen on other platforms like it. It gives Weekly or Monthly detailed summaries of spendings along with classifying the card’s activity using color codes and categories. A map is also available to check where the money is spent as well as an advanced fraud protection system. Some other small but practical features are scheduled payments, reminders based on spending frequency and automatic calculation on saving interests. 

But that is not it. Apple guarantees no fees … No hidden fees. No foreign-transition fees, a true promise. Then comes the “Daily cash” feature, the company’s special added touch to digital banking. 

As explained on the Apple website, it works as a membership reward program that truly benefits the users. The more purchases are made with the card, the more “Daily Cash” is earned. 3% cashback is earned on every purchase through apple.com or its partners like Uber. A spectacular reward in the finance industry. Then 2% cashback is earned on every other purchase that goes through the Apple Pay process. All types of purchases with no limits. And don’t worry, if the store doesn’t take Apple Pay, you may use the physical card and receive a 1% cashback. 

However, the operation is not always immediate. The cashback or “Daily Cash” is not as daily as it sounds. The process can take a few days before users receive the money in the Wallet App, or more specifically on the “Apple Cash” card.  

Ps: According to Apple, the physical card can not come into contact with leather or denim (jeans and most wallets are off-limits) among not touching another credit card, loose change, keys or other items that could scratch it. Let’s say innovation comes with fragility.

The Apple way

Google, Sony, Samsung, and others use the same materials to build their devices and Apple’s employees aren’t more qualified than the ones at other tech companies. What makes Apple so different? Marketing. Apple sells 18% of smartphones globally but earns 87% of smartphone profits.

” Simplicity is the ultimate perfection “

Leonardo de Vinci. 

Apple has managed to build an empire through the simplicity of their product and by building a close to perfect brand image. 

By transforming the niche market of new technology into products that most can use without a struggle might be Apple’s greatest advantage. The company manages to sell high tech products utilizing non-high-tech terms. By doing so it reduces customers’ confusion and increases the target.

Apple and Fintech

The fintech market is predicted to grow 13,7% in the next 5 years. Expected to reach 7,640 billion USD by 2024, it is full of potential for a tech company like Apple. If we compare to the smartphone market, it only grew 1,2% this year and the competition is once again quite aggressive.

” It’s the cult. It’s what kept the damn thing afloat during some of the most incredibly bad business decisions I’ve seen anywhere”

Former Apple CEO, Gil Amelio.

Apple has managed to create a customer base that is treating the brand as a religion. With the Apple card, the company is entering a new market, meaning more targets. Combining the fact that many individuals would buy anything Apple has to sell along with the company budget and innovation capacity, Apple will further its presence in society and continue to expand.

The Apple Card is more than a new service; Apple is entering a new era by diversifying its activity today for the sake of staying one of the most profitable and popular brands tomorrow. With their notoriety along with large financial and marketing means, entering the fintech market will presumably be lucrative and beneficial in the long term to the prestigious Californian giant.

Sources: apple.com / macworld.co.uk / pwc.nl / counterpointresearch.com / mediakix.com / mordorintelligence.com


Published by Néo

P.D.W. Administrator & Business Student at ESSEC Business School, France.

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