Apple Card and the future of payments

Last updated: 03 April 2019

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 likely wants its users to use Apple Pay for that). PAN and CVV are not displayed on the card but are available in the Wallet app for online purchases at eMerchants not accepting Apple Pay in-app or in-web yet. 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 25th keynote about the user experience for card activation. With the introduction of the NFC reader mode in iOS12 last fall, many observers anticipate a solution whereby a simple tap of the physical Apple Card on the iOS device where the digital version of the Apple Card is installed could offer a simple, seamless journey for activation. Cardholders in Regions like Europe do activate their cards today using PIN at the first ATM or POS transaction.  For the US market where credit cards don’t use PIN, alternatives to current IVR or web based solutions could be foreseen.

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.  My first impression on March 25th when discovering the ISO credit card version of the Apple Card is that it brings tremendous recognition to the EMV card industry. We strongly believe that a 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, which are now being used by payments card firm Curve. The EMV card industry is increasingly using metal for high-end cards segments.

The ISO version of the Apple Card is made entirely from metal, rather than a hybrid of metal and PVC like 4 out of 5 Gemalto cards in our Metal Cards portfolio. This means the card will not support contactless payments. Such transactions are using the NFC Card Emulation mode whereby the terminal powers the card via magnetic induction via a large coil (antenna) embedded in the card body. Metal cards can support contactless payments when at least on side of the card is made of plastic.Apple Card users can use the digital version of their card, in conjunction with the Apple Pay mobile payment service, for contactless payments at the Point-of-Sales terminal.

Accelerating Digital Payments for e-commerce

The ISO version of the Apple Card comes with no PAN and no CVV on the card body, but these data are available in the Wallet app for online purchases. In addition, Apple Pay payments in-app and in-web are increasingly adopted by eMerchants, accelerating the trend for new Digital Payments for eCommerce.  Gemalto also brings solutions such as DCV (Dynamic Code Verification) to protect cardholders from skimming frauds. Malicious web sites managed by skimmers are more likely to put PAN, CVV and expiration date data at risk than the card body itself.

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. On the US market, cardholders are used to credit cards with no PIN entry at the Point-of-Sales.  In most other regions in the world, Chip&PIN is used and the trend we observe is to use fingerprint in lieu of the PIN code.

The bottom line is that, on March 25th, I personally took the announcement of the new Apple Card as another strong proof of EMV cards value for a complete, universal payment experience. The fact that the ISO version of the Apple Card is using metal is also, to me, great news for the ongoing trend to adopt metal for high-end payment cards. Innovation in Digital payments for eMerchants is also something we like to push for.

Bottom line, a great day for the EMV cards industry and for the payment industry at large.

What do you think of the new card? Let us know in the comments or by tweeting @gemalto.

2 thoughts on “Apple Card and the future of payments

  1. Hi,
    Apple has certainly made it very attractive for its customers by giving them 3% and 2 % back on purchase of Apple products and other spends respectively.Another good point is that they are providing analytics on every spend to aware the customers of their expenses. They can certainly reduce the interest rates they are charging after all a company as huge as Apple can definitely afford to do this.

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