On March 25th 2019, Apple unveiled plans to release a new branded payment offer called “Apple Card” as part of its plans to boost its services business. Apple is increasing its portfolio of services with multiple new announcements in addition to the Apple Card, such as Apple News+, Apple Arcade and Apple TV+.
Apple Card, which is set to launch in the US this summer, comes first in Apple Wallet for Apple Pay payments in store, in-app and in-web. It has been created with Goldman Sachs as the issuing Bank and MasterCard as the payment scheme. In addition to the Digital Card, Apple Card will also come as a standard ISO credit card, made of Titanium with the EMV chip for contact mode payments at the Point-of-Sales terminal. The card is not expected to support contactless payments (Apple clearly want its users to use Apple Pay for that) nor to perform online purchases as no PAN nor CVV is displayed on the card. Apple CEO Tim Cook mentioned during the keynote that the total number of Apple Pay transactions (at stores, in-app or in-web) should pass the 10 billion mark in 2019. This is about 20 times less than the total amount of cards payments, at store or online in 2018. Having a physical card in addition to a digital card will clearly increase the number of transactions that this new Apple Card offer will be able to reach.
There were no comments during the March 29th keynote about the user experience for card activation, but we’re hearing that a solution using a NDEF NFC tag approach to perform a card tap on the iPhone is foreseen. That use case of contactless would be totally different than contactless payment. It would just be a simple tag (sticker?) carrying an Identifier. The iPhone would use its NFC reader mode to read than ID. The matching of the card ID and the iPhone Wallet ID would be a fair way to perform a card activation remotely.
Cards and Mobile complement each other
The first strong take away is that, for any given payment solution to get significant usage, cards are still the only way to connect billions or consumers with millions of merchants in the years ahead. Innovative payment solutions bring value, but none of those will totally displace card payments anytime soon. Apple, with the ISO credit card version of its Apple Card, brings tremendous recognition to the EMV card industry. Apple’s positioning of the card is clearly coming with a mobile-first mindset, but they acknowledge that a real, rich customer experience comes with the combination of mobile and card to get a seamless, broad and enjoyable payment experience.
Continuing the metal card trend
Perhaps most interestingly, Apple has chosen to create its EMV card using titanium, a trend we have seen increasing in popularity. Like our own range of metal EMV cards (now being used by payments card firm Curve) these cards are a ‘top-of-the-line product’ for customers, supporting Apple’s brand image as a premium company. Unlike other cards, however, Apple has decided not to put the customer PAN and CVV on the card body, choosing only to engrave the Apple logo and the cardholder name. This is driven by an Apple logic whereby online purchases should rather be done using Apple Pay in-app or in-web. The message is clear to Merchants: go Digital for payment, if not done already.
Another difference from Gemalto’s metal cards portfolio is that the Apple Card is made entirely from metal, rather than a hybrid of metal and PVC for 4 out 5 Gemalto cards in the Metal Cards portfolio. This means the card will not support contactless payments. Instead, users will be expected to use the digital version of their card, in conjunction with the Apple Pay mobile payment service, in instances where they might now use contactless.
Accelerating Digital Payments for e-commerce
Apple has chosen to stretch the message but remove the ability to use the ISO version of the Apple Card for online purchases. That’s because the Wallet App version of the Apple Card is here for that matter. It’s an abrupt way to push for Digital Payment at eMerchants, but it heads in the right direction. Apple Card users, in many instances, will still need to use another card with PAN, CVV (or DCV) and Expiration date for some of their purchases. But it’s fair enough to see the Apple brand push for a change in that field.
Cashback and loyalty scheme with Apple
Apple is also offering a cashback incentive on every purchase made using Apple Pay or the physical card, aptly named “daily cash”. It wants to entice people with “clearer and more compelling” rewards than rivals. 2% cashback will be offered for all purchases using Apple Pay, 1% using the physical card and 3% when purchases are for Apple products or services. Cash is accumulated in the Apple Pay cash card on your mobile (US only for now) and can be redeemed via NFC payments, in-app or peer-to-peer via iMessage. Although many banks already offer cashback rewards, Apple’s drive to make them so easy to redeem will be an attractive prospect to many, especially as the scheme will apply to all purchases (many banks now offer cashback only when purchases are made from a specific company).
Biometrics for Apple Card: only for the Wallet App version today
The decision not to include cutting-edge biometric technology on the physical card is an interesting move by Apple. We believe that biometric technology on credit cards enhances both their convenience and security, hence why we developed our own biometric EMV card with a built in fingerprint sensor. However since the only target market today for Apple Card is the US, the use of Biometrics in lieu of a PIN code was not a priority as US credit card are Chip&Nothing – i.e. no PIN code used at all.
The bottom line is that, on March 29th, Apple , the master of mobile user experiences, gave an impressively strong endorsement to EMV cards, the undisputed must-have for a real ubiquitous user experience in Payment for the years to come. Apple has also validated that metal is the design edge for high value cards. And last but not least, Apple sent a signal to eMerchants that Digital payment is the future.
Well done Apple! We love those three messages at Gemalto and have been talking about them too for a long time.
What do you think of the new card? Let us know in the comments or by tweeting @gemalto.
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March 29, 2019 at 09:08PM
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