Tripp Mickle, Liz Hoffman, and Peter Rudegeair, reporting for The Wall Street Journal:
Apple currently takes a small cut when iPhone users make
credit-card purchases through Apple Pay. It would get a bigger
slice of the swipe fees from its own card, some of the people
said. Executives also hope the card will boost use of Apple Pay,
which has been slow to catch on among users and merchants.
Has Apple Pay really been “slow to catch on”? I see it (and use it) at an ever-growing number of merchants. Here’s a report from August that says almost one-third of iPhone owners used it in the last year and that it has over 250 million active users.
The Apple Pay card will use Mastercard Inc.’s payment network,
which is the second-largest in the U.S. after Visa Inc., some of
the people said. Cardholders will earn cash back of about 2% on
most purchases and potentially more on Apple gadgets and services,
some of the people said.
Shouldn’t The Wall Street Journal, of all publications, be able to state as fact which credit card has the bigger network, rather than relying on the word of “some of the people”? It’s not hard to look this up.
[Update: Dozens of readers have written to point out that I misread the above the sentence. “Some of the people” didn’t tell the Journal that Mastercard is the second-biggest credit card network; they told the Journal that Apple’s card will use Mastercard. My bad — but it’s a really poorly structured sentence.]
Banks including JPMorgan Chase & Co. have spent heavily to lure
cardholders with travel points, airport lounge access and other
generous perks. Neither Apple nor Goldman is eager to join that
race, people familiar with the project have said. Instead, the
companies are betting that Apple customers will use the card
because it is better integrated into the iPhone.
Engineers are working on new features for the Apple Wallet app
that would encourage users to pay down their credit-card debt and
manage their balances. Executives have discussed borrowing visual
cues from Apple’s fitness-tracking app, where “rings” close as
users hit daily exercise targets, and sending users notifications
about their spending habits. There also could be notifications
based on analysis of cardholders’ spending patterns, alerting them
for example if they paid more than usual for groceries one week.
My American Express card is incredibly well-integrated with my phone already.
My big question is what the interest rates are going to be. Credit cards have turned into a dirty business where people who carry a balance pay exorbitant interest rates, even if they’ve never missed a payment. And the higher the interest rates, the harder it is to pay off the balance. Is that where Apple wants Services revenue growth to come from? Charging people usurious interest rates on their credit card debt?
Maybe if this works out well, they can start making payday loans at Apple stores.