Apple’s digital card leads the big credit card overhaul


Have you seen Apple’s digital credit card?

Right now it’s only in the US, but it’s worth noting as a forerunner in the big credit card overhaul.

It looks good, comfortably seated in Apple’s digital wallet. In fact, I would say that the freshness such a digital payment product contributes to its adoption. You might be kidding, but think about how much plastic you are carrying right now. Some readers probably don’t even have a physical wallet, let alone plastic cards.

Westpac’s new digital credit card, Flex, is another reminder of where credit cards are going. This card offers access to a $ 1,000 interest-free purchase credit, no late payment fees, and no currency exchange fees. Instead, users are billed a flat monthly fee of $ 10, which will not be charged if they pay the amount owed for the previous month on time.

In this way, the card is very similar to a Buy It Now product, as well as other cards based on past payouts, including CommBank’s Neo Card and NAB’s Straight Up Card. The same goes for the installment version of Mastercard, which it paired with Qantas and Latitude Financial. ANZ was also a part of this act recently, partnering with Visa on a similar installment style card.

So why is all of this important?

Well, this is the latest trend for traditional lenders to move credit cards to something different – something more like buy now pay later.

The folks at Flex say its card was “designed to meet the changing needs of young customers who want greater control over their finances and are more likely to use their smartphones to manage their money.” That’s the key point: Younger customers want a format that resonates with them, even though many “interest-free” credit cards already operate in a similar installment-based setup.

The perception of greater control, and the desire of consumers in general to use their smartphones for absolutely everything, is sort of the end of plastic cards.

The paradise of digital payments?

For those who are passionate about everything new, digital technology can be seen as a saving grace in this space. But there could actually be a problem if tech companies control both payment platforms and the rules surrounding their use. It looks a bit like Facebook picking the news. For example, Apple’s digital wallet app is a closed payment structure that is surely suitable for some lenders, but not all. In fact, many of the major lenders have been slow to participate in this format, which commits the user to the Apple phone and therefore its contactless payment technology.

While most of the big banks have signed up in recent years, several lenders now find themselves looking for new ideas to better compete in the digital payments space. Among their ambitions is participation in the new credit card movement, which largely follows the buy now pay later models. The trick here is to focus on the user experience and less on the limits and rules of the “old” credit card.

But the influence of smart technology on our personal finances may not be so clear.

Plastic cards versus new digital payment platform

Apple has been reported not to allow other businesses to use their NFC chip – which is a silicon component used to communicate information – for contactless payments. It should be noted that CommBank chief Matt Comyn told a joint parliamentary committee on digital wallets in July that Apple Pay has an 80% market share in digital wallet payments, a level it called it “generally concerning,” according to a report in the Australian Financial Review.

In short, Comyn says that if payments are routed through smartphones – most of which are made by Apple – it’s problematic for the consumer who deserves options. If Apple’s technology, or any company’s technology for that matter, creates a closed loop that deprives consumers of the benefits of new payment technologies, it could likely limit choice, experience, and competitive pricing, like Comyn alludes to it. CommBank therefore wants “fair access” to the iPhone’s NFC chip, AFR reports. Without this, the bank says it cannot fairly create a competing product.

The main issue here is Apple’s scale, which means its digital wallet is a widely used service. Apple would no doubt argue that it has the right to protect its intellectual property, but also that its system helps the lenders it works with given the security of its technology, as well as the reduced costs associated with creating cards in. plastic.

We don’t have time to detail all the pros and cons here, suffice to say that the ACCC is looking at this and the overall regulation around such payment systems.

For us, the heart of the matter is that consumers seem attracted to new payment methods and, in particular, share a broadly favorable view of Apple products. It stands to reason that Apple’s approach leads the way and when it creates something new, like a credit card in its digital wallet, in its Apple phone, consumers pay attention.

One step less – better payment experiences

So it became all about user experience: The credit card landscape has turned into a battle of payment formats and how those designs, so to speak, can impact the payment journey. client.

The new formats are more appealing to the eye, but also more easily accessible and this cannot be underestimated. People want more convenient and faster payment methods, especially when they spend less time on physical stories during this time of the pandemic. They want products that require fewer steps and probably as few swipes of their phone as possible.

Apple’s own credit card can be found here. This is the perfect example of a non-financial institution making its mark in the field of personal finance. If you’re already an Apple customer, signing up seems like a no-brainer. Access to such a map (assuming we get it here in Australia) seems much more relevant in today’s increasingly digital world. What Apple got right with its product is its emphasis on simplicity: it’s easy to find, understand and manage. And like the phone that hosts the card, it’s nice to look at. It’s part of the equation, there’s no question about it, and as such, traditional lenders seem keen to get more involved in credit card reviews more broadly.

If you want to learn more about how you can potentially save money on your credit cards or payment platforms, check out our Credit Cards and BNPL hubs.


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