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At a well-publicized event earlier this week, Apple (NASDAQ: AAPL) introduced an expansion of its already successful Apple Pay program with the introduction of a credit card dubbed Apple Card. Apple detailed a number of features designed to make the card stand out from its peers, including a simple application, no fees, a lower interest rate, a clear and compelling rewards program, and of course, a focus on the privacy and security of the transactions.
Unlike most cards, the Apple Card has no card number, CVV security code, expiration date, or signature on the card, "making it more secure than any other physical credit card" according to Apple. Users will be able to find the aforementioned information in the digital copy of the card in the Wallet app.
While it might seem like a trivial addition, the Apple Card could make an already successful foray into digital payments even better.
Image source: Apple.
Removing customer pain points
Apple will use machine learning and Apple Maps to replace the cryptic merchant names that appear on many credit card statements with names and locations that users will actually recognize. The app also provides weekly and monthly spending summaries arranged by categories.
The rewards program was another area that Apple sought to improve. Every time users make a payment with Apple Pay using their iPhone or Apple Watch, they receive 2% cash back, and that rises to 3% for purchases directly from Apple -- including at Apple retail stores, the App Store, or for Apple services. All other purchases get 1% cash back, and the total amount of cash back is unlimited.
The Daily Cash feature allows rewards to accumulate on a daily basis, and those cash rewards are stored in an Apple Cash card in the Wallet app and can be used the same day. This allows the accrued rewards to be spent on purchases, used to pay down the card balance, or sent to friends using the Messages app.
Apple also added tools that help users better understand the cost of interest when not paying their balance in full. Customers can use the app to determine how a specified monthly payment will affect the balance and the total amount of interest paid.
The company partnered with Goldman Sachs and Mastercard, which will act as issuing bank and global payments network provider, respectively. Apple said that Goldman would never sell or share data with third parties for marketing or advertising.
Apple Card users will benefit from some high-end security features. The company created a unique architecture -- the Secure Element -- consisting of a special security chip used by Apple Pay, which contains the card's information. Each time a payment is made, it creates a one-time-use dynamic security code that protects your card from unauthorized use. Apple also said it won't track where the user shopped, what they bought, or how much they paid. That information is all contained locally on the iPhone.