Thanks to Apple, the iPhone is hardly used as a phone at all. The same thing may very well happen to our wallets — forcing established credit card companies to change the way they do business.
The tech giant unveiled its Apple credit card through a partnership with Goldman Sachs and Mastercard on Monday. Apple is entering a crowded, competitive market filled with banks and newer fintech firms. While many of the perks on the Apple card are already available at competitors, the tech company's brand, massive customer base and new security features could help it carve out significant market share.
"Money is just a form of data, and Apple has been great at managing access to data. They'll take the same approach to money over time," said Ryan Gilbert, general partner at Propel Ventures. "Apple has raised the bar — we'll see most issuers rethinking their products and seeking to copy Apple."
Apple users will be able to sign up for the new card this summer through their iPhones, according to the company. It's centered around Apple Pay, the company's mobile payment and digital wallet service that started in 2014. The card will also let users manage spending and rewards through the iPhone's Wallet app.
Among the features other card companies might want to copy is Apple's heightened security. The card will incorporate a one-time use authentication code that is protected by biometric security — either "Touch ID" or "Face ID" through the iPhone. The sleek, minimalist titanium card just has the holder's name etched onto it with lasers. It forgoes card numbers and other sensitive information.
If customers are able to trust Apple with their bank accounts, that could be "the winning punch" against other credit cards with similar perks.
"That's an opportunity over existing banks, especially if you get hacked — Apple is known for that Apple store, Genius bar experience" Gilbert said.
Apple's credit card comes with perks, but they're not entirely new. The card gives 2 percent cash back on Apple Pay transactions and 3 percent on direct Apple purchases. Customers get 1 percent on purchases with the physical card and the company said rewards are dispensed daily.