The Apple card is a perfect example of Apple's strategy after the iPhone

One of the most tangible announcements at yesterday's Apple Services show was its most interesting: a credit card, aptly named Apple Card, with a physical and digital version that allows you to recover up to 3% . In appearance, the product is a way for Apple to sell its brand on another object in your daily life that you probably already have. But under the paint of a titanium credit card with the Apple logo, the company clearly describes its future after the iPhone, in which services reign supreme, following a formula that we have never seen before. try it before.

In this case, Apple decided that it needed a traditional product, even with the questionable moral baggage of a credit card, to promote Apple Pay. While the digital wallet and payment platform are growing rapidly, they are still used by less than half of iPhone owners around the world (let alone the United States). While Apple believes that competition with Netflix and the major cable companies is part of its future by creating its own television shows and paying the price for the Hollywood talent, the company no longer sees the reversal of the status quo. in payments as a viable path for Apple Pay. .

"I think the odd thing here is that credit cards are not necessarily a payment innovation, even with better rates and better loyalty," says Rivka Gewirtz Little, director of global research at the IDC analysis firm, specialized in payments. "So, seeing a big technology company, driven by innovation, adopts such a traditional path. That's what I find a little strange here. I would like to see Apple innovate more in the transformation of our way of paying. "

For years, as the iPhone had become ubiquitous and sales were slowing down, Apple was trying to mimic the revolutionary success of the App Store and iTunes before making their way into television and cinema, mobile payments and news. But over the past five or so years, Apple has been facing the harsh economic and logistical reality of trying to change far less malleable industries than music and mobile software.

And while Apple Pay is a bold vision of the future, it will probably be years before digital contactless payments become really common in the United States. In the meantime, Apple wants to sell you what's bountiful and boring – a credit card, a cable package, a magazine subscription – hoping to integrate its software and services into everyday life just like his smartphone. Industry transformation is no longer an Apple gaming book, especially because it is catching up with companies like Netflix and Spotify.

Apple's strategy mirrors that of Amazon. The e-commerce giant has started selling real new products like the best, such as the Kindle, then the Artificial Intelligence powered Echo speaker. But since then, Amazon has been using the goodwill of the consumer and the power it exerts on its digital showcase to sell everything from microwaves to wall clocks to white label clothing brands, supplies for AmazonBasics home and AA batteries.

Image: Apple

Apple is doing the same, using the iPhone as the ultimate gateway to turn every iOS and Mac user into a series of multiple recurring revenue streams from products made first and sometimes enhanced by other companies, whether Apple Music, Apple News, iCloud, or the new TV application. Apple does not produce its own version of Prime, in which all of these services could be bundled, but the company seems to be taking the example of Amazon's subscription strategy to further lock iPhone owners into a broader ecosystem.

With the Apple card, the company goes even further and tries to capture not only what you consume, but also the financial means you use to do it. Apple does not reinvent the wheel – the map, as reported by CNET, has no contactless features like the most recent cards from competing banks; you will have to drag it or enter the chip in a reader to be able to use it every time. Instead, Apple offers users a simple credit card that is a cleverly disguised way to adopt and use Apple Pay.

Unlike the subscription services it plans to sell, the Apple Card is offered without annual fees, without late payment and with an interest rate assumed to be below the industry average. In addition to that, it has a fairly simple rewards program that encourages consumers to use Apple Pay to buy Apple products. The maximum discount is 3%, probably due to the fact that Apple no longer has to pay such a high processing fee. as with a third card. If you have to use the Mastercard physical card, you will receive 1% back. (Certainly, when it launches, the Apple Card will be one of the only cards on the market with no sign-up bonus, the main incentive mechanism that banks use to get people to open new lines of credit.)

To encourage customers to register, Apple relies heavily on its approach privileging privacy. Indeed, Apple wants to be the only technology company you trust. Yesterday on the scene, CEO Tim Cook said the card would not collect data on your transactions and Apple would not let its partner bank, Goldman Sachs, sell this data to third parties. But of course, this raises the question: how does it make money, and without these usual stipulations, does not Apple simply trust users who go into debt and cash in the insurance money that they have to pay for the coming years?

The goal may not be to generate profits, at least not on the service itself. Everything comes back to Apple Pay. The first reason why Apple has created a credit card is to favor the adoption of Apple Pay and create a digital wallet that can be used not only in the real world, but also in an iOS ecosystem of more and more populated. paid services.

Image: Apple

"Mobile wallets are still a small part of the market. So it's understandable that you have to lobby if you want more adoption, "says Rasha Katabi, CEO and co-founder of Brim Financial, a credit card and digital payments company. "As the adoption of e-commerce grows and we see an exponential rate in recent years, having a physical card or not will have a strong connection to the adoption and migration of physical shopping shopping. line."

The only online shopping that Apple really cares about is in its ecosystem: in-app subscriptions for its new services, microtransactions in mobile games like FortniteVenmo-type P2P payments with Apple Cash and purchase of Apple hardware from the Apple Store mobile app. All of this is eligible for the 3% Cash Back Bonus, confirmed Apple The edge. And this arrangement sheds an interesting light on the whole Apple Card approach.

With its incentives, Apple creates a system that will allow you to shop around the real world at Apple Pay partners for an additional refund bonus, replace your App Store credit card with an Apple payment card with an even higher bonus, and to rely solely on the physical map for when you absolutely must. And all of this is underpinned by Apple's promise of privacy and its relatively solid security history, as well as by the luxury status symbol provided by an Apple-branded titanium coin, with its unnumbered design that makes it easier to only by coincidence, on social media.

This may be a good incentive for younger users, especially those who do not have large rewards points and credit years built with existing banks and cards, to turn to Apple as the primary provider of credit. credit. Credit cards, especially those of Goldman Sachs and dinosaurs like Mastercard, are not the most innovative products. Neither television offers nor magazine subscriptions.

However, Apple's service strategy, similar to hardware at the time of Tim Cook, is not to be the first, but to provide an Apple-centric option that will keep you hooked and indifferent at first.

Shannon Liao contributed to this report.