Apple’s metal card could succeed even though it makes no sense

Apple / WIRED

Last year, Apple unveiled a new status symbol for tech bros: a sleek, pale grey credit card made of titanium. It had no number, no sort code and no associated bank account. Even though it offered fewer perks than some credit cards already on the market and – compared with the Apple Wallet app – no additional discounts, analysts predicted a “tsunami” of demand from the brand’s fans.
If this prediction is to be believed, the Apple Card will succeed despite itself. “I was pretty underwhelmed, and I think a lot of other folks felt that way,” says Matt Shulz, chief industry analyst at CompareCards. In the US, he says, the card industry is driven by companies that offer the best fees and the best benefits, and Apple “didn’t necessarily blow the field away in any of those areas”. “It simply wasn’t earth-shattering,” he says.


The credit card, launched in partnership with Goldman Sachs and currently available only in the US, can be used in physical transactions, or digitally through Apple Wallet. It offers no fees, and an APR between 12.49 per cent and 23.49 per cent based on credit score. Customers get 3 per cent cashback on all purchases made at an Apple Store, through the App Store, or at various other vendors; 2 per cent when they buy something using Apple Card with Apple Pay; and 1 per cent using Apple Card without Apple Pay. By comparison, the American Express Blue Cash Preferred card offers 6 per cent cashback at US supermarkets, and the Amazon Prime Rewards Visa card gives 5 per cent cashback on Amazon and Whole Foods purchases.
The Apple Card has already run into controversy. The metal itself is highly impractical: users are told to avoid putting the 14.75g card in a leather wallet to prevent discoloration, and to wipe it gently “with a soft, slightly damp, lint-free microfibre cloth” to maintain it. After the card launched in August 2019, tech entrepreneur David Heinemeier Hansson and Apple founder Steve Wozniak claimed that men were being given more credit than women, even if they shared the same bank accounts and assets. New York regulators are now investigating these claims.
However, Goldman Sachs executives boasted that the launch was “the most successful launch of a credit card in [the] United States ever”.
This is good news for Goldman, which has flirted with launching a retail banking arm several times over its 150-year history, and has found a neat way to push ahead in a competitive market by leveraging the star power of the Apple brand. For Apple, it’s a chance to tap into the credit market without much risk: although Apple handles the branding, the back end is operated by Goldman, and debt and billing still fall to the bank.


PitchBook analyst Robert Le estimates that around 800,000 users were approved for an Apple Card by the end of October 2019, two months after launch – a number he describes as significant, but still very low compared with competitors such as Chase or Bank of America. “As is, we believe the Apple Card will remain niche for the time being, because other cards out on the market have much better partnerships, rewards programmes and sign-up bonuses.”
But Apple’s game plan was never to compete head on with banking giants. The smartphone giant pivoted away from slowing hardware sales last year to launch a host of services – a strategy that involves leveraging customer loyalty. To own an Apple Card, you need an iPhone and Apple Wallet, and you’ll use Apple Pay. To win, Apple doesn’t need to compete with the credit card giants. Every time this flashy, impractical card is seen in public, it does something that other cards can’t: it pushes more people into Apple’s ecosystem.
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