First Apple revolutionized the personal computer industry
with the iMac. Then Apple redefined the cellphone industry with the release of
the iPhone. Now, Apple has set its sight on the payments industry.

The tech giant released its first credit card—the Apple
Card—on August 20, with Goldman Sachs as the issuing bank. The card was designed
to be primarily used with Apple Pay on Apple devices, but the tech giant did
release a flashy titanium physical card.

While many companies have released their own credit cards,
Apple’s approach has drawn much buzz due to the card’s lack of fees, quick onboarding
process, and sleek mobile app experience. For its part, Apple marketed the card
with the line “Created by Apple—not a bank,” signifying how it’s seeking to
disrupt the banking landscape.

To better understand what the Apple Card brings to the payments
space, and how issuers should respond, PaymentsJournal sat down with Bharghavan
Vaduvur, CEO of OnDot, and Aaron McPherson, VP of Research Operations at
Mercator Advisory Group.

Vaduvur and McPherson discuss the importance of the Apple
Card’s emphasis on a mobile app, the potential impact on small banks, and how
issuers can stay competitive against the global tech giant.

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It’s not just a store
card for Apple Music or the App Store

One of Apple’s defining characteristics is its focus on the
customer experience. Now the company is applying this to the payments industry.

“This is really the first time a tech giant that anchors its
entire existence on understanding the consumer experience is getting into a
payment card issuer space,” said Vaduvur. Because of this, Vaduvur believes
that Apple’s foray into payments is a big deal.

It has the potential to redefine how customers interact with
their payment cards, he said, regardless of how much of a market share Apple
eventually commands.

McPherson identified specific ways in which the card is
changing the relationship between cardholder and card. First, the application
process for getting the card is seamless and quick. Second, the card is issued
instantaneously and goes straight into the digital wallet. This means that
within minutes, a customer can get approved for the card and start using it
right away.

The other notable aspect of the Apple Card is the
mobile-first orientation. McPherson pointed out that users only get 1% rewards