Apple Wants to Disrupt the Credit Card Market

March 28, 2019
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Technology company Apple Inc. (NASDAQ: AAPL) has surprised financial markets with the announcement of a new credit card offering. The company revealed its Card service this week, showing off a digital numberless credit card that fully integrates with the Pay network. The company believes that its card will be more transparent and secure than others on the market.

Do first impressions suggest that they are ready to disrupt major banks and card companies?

Wants Users to Stay Within its Ecosystem

When the Apple Card was announced this week, CEO Tim Cook said that it is “the most significant change to the credit card in 50 years.” While many analysts and experts would disagree with this claim, there is no doubt that it is offering something quite unique.

The new card will be offered to existing device owners with no late fees, no annual fees, and no fees for international transactions. The card can be used through a secure app and Apple Pay, or with a physical card at normal payment terminals using the MasterCard network.

The card will be offered with an annual percentage rate (APR) between 13.24% and 24.24%, depending on creditworthiness.

Through a linked iPhone, they will show users an estimation of credit interest based on how much of their balance they are able to pay. Apple says that the calculation is done in real time and it will allow users to make informed decisions about repayments.

The company is offering 2% cashback on purchases, with a special 3% cashback rate on purchases from the Store.

Despite the claims of Tim Cook, nothing here is too out of the ordinary. The key differentiator is the integration with Apple’s iOS. Many analysts see this as it’s way to keep users on the platform as iPhone sales decline in the United States.

Apple is No Longer Just a Hardware Manufacturer

The announcement of the Apple Card is further proof that the company is continuing its push to become a service-oriented business. Apple Music, Apple TV+, and a newly announced digital newspaper subscription service are all signs that it no longer sees hardware as the only way to grow.

Apple stock closed on Wednesday with a daily gain of 0.90%. Stock price has increased 19.48% so far this year, soundly beating the 11.91% growth across the S&P 500.

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