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A look into the future of Credit Cards - The Apple Card - America - CBC Article
March 25, 2019
7:44 pm
User230
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apple-card-physical-100791828-large.jpg

Pretty huge.

It is not released yet but its coming soon. It will be released in America. It is relevent to Canada as it might show up here if successful.

https://www.cbc.ca/news/business/apple-card-credit-1.5070952

Summer release
2% cashback
3% on Apple products
1% if you use the physical card.

Features:

No late fees
No annual fees
No international usage fees (fx fees?)
No over limit fees
titanium metal physical card (I attached a photo)
Financial tracking. Similar to Mint
Goldman Sachs backed
MasterCard backed
Rewards are given daily not monthly or yearly
Low interest rate.

"Customers will also be able to track purchases, check balances, and see when their bill is due right from an app that lays out exactly where and when they spent their money."

"You're also going to get cash rewards and receipts. It's just delightful. And it's … going to shock all the traditional credit card holders."

"He says credit card companies will be scrambling now to match what Apple is offering as paying by smartphone will become the norm. Other credit card companies will be designing an Android app to do what the Apple card does and more, Alexander said."

"Since all fee monitoring is utilizing on-device intelligence, Apple won’t ever know what you acquire, the place you acquire it, or what you paid. And Goldman Sachs guarantees to by no means share or promote your information to third-party distributors."

"Apple VP Jennifer Bailey known as the titanium bank card “the most beautifully designed card ever,” ".....

If it does come here with these kinds of rewards it would rule the Canadian credit card market.

Other probably better sources:

https://www.zdnet.com/article/meet-apple-card-no-late-fee-apple-becomes-a-bank/

https://techswitchcf.com/2019/03/25/the-apple-card-may-be-the-most-revolutionary-announcement-apple-made-at-its-show-time-event/

https://www.apple.com/newsroom/2019/03/introducing-apple-card-a-new-kind-of-credit-card-created-by-apple/

March 25, 2019
7:49 pm
Rick
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Wonder if you can use it with google Pay?sf-winksf-smile

March 25, 2019
8:40 pm
Norman1
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I very much doubt the 2% cashback rate will last.

The MasterCard interchange in Canada on a World Elite card is at most 1.86% for an electronic charge. I don't think the Apple card is a World Elite card. If it is just a regular MasterCard, the interchange is at most 1.30% for an electronic charge.

At 2% cashback, someone would be losing 0.14% to 0.70% with every use. Will there be targeted ads in the app to make up the difference?

March 25, 2019
9:04 pm
User230
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Norman1 said
I very much doubt the 2% cashback rate will last.

The MasterCard interchange in Canada on a World Elite card is at most 1.86% for an electronic charge. I don't think the Apple card is a World Elite card. If it is just a regular MasterCard, the interchange is at most 1.30% for an electronic charge.

At 2% cashback, someone would be losing 0.14% to 0.70% with every use. Will there be targeted ads in the app to make up the difference?  

Rogers gives 1.75% and a whole bunch of insurances. They make their money off of interest most likely.

If this card has no insurances and give 2% it could make it up and more on interest.

Big corporations like Rogers and Apple can and will gamble and take risks where other companies will be ho-hum all the way to the bank. Apple has made a living on shaking up the establishments where ever they go. We need companies that will stop giving low rewards and high fees. Low risk strategies work only if all of them play along and in Canada that is how it has been for a long time.

The other companies will lift their game a bit though trying to compete. If there is no big player like Apple they would be doing very little for the consumer in terms of rewards and fees. That is if all the rumours are true about apple.

March 25, 2019
9:07 pm
User230
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Rick said
Wonder if you can use it with google Pay?sf-winksf-smile  

They did mention that there will likely be an offering by Google to match this offering by Apple. I only skimmed so maybe I got that wrong but to me that is the next logical step for other big corporations to compete with Apple.

March 26, 2019
12:59 am
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I wouldn't expect the Apple Card credit card in Canada anytime soon.

There was a 2-year delay for Apple Pay to show in Canada and Apple Pay Cash still hasn't shown. Apple Pay Cash seems pretty much useless because of it's singular platform ability - Interac e-transfer is light years ahead of Apple's useless offering.

The US banks / merchants have lagged the world in chip-enabled cards / contactless pay point if sale terminals and that has been Apple's primary focus. Statistics have shown that the North American public have been slow in electronic wallet usage offered by Apple / Samsung / Google. My family and friends keep telling me that I'm the only one they've ever seen use their smartphone to pay a bill.

March 26, 2019
1:34 am
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The cashback rewards are 1% when using the physical Apple Card and 2% when using Apple Card via Apple Pay.

Apple Pay using my CIBC debit/credit cards are restricted to $100 on contactless pay purchases (or equivalent in foreign currencies) - you only get the 2% for those purchases. Paying for big ticket items still requires the physical card for which you only get 1%.

It's all in the details.

March 26, 2019
4:45 am
Loonie
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Americans get better shopping deals than we do in almost every way, including credit card deals. I wouldn't expect the same offer to Canadians, whenever it might get here.

March 27, 2019
4:44 pm
Doug
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If Goldman Sachs is issuing this card (didn't know they did that), then I definitely wouldn't expect a similar launch in Canada. I'm sure the banks would love to launch a co-branded Apple credit card, but I don't see it happening. Apple will want too much control over it and access to customer data (for analytics purposes). Those rewards aren't particularly attractive - it's unlikely a no fee 2% cash back credit card would come to Canada, with so many banks in Canada lowering the rate to 0.5%. In fact, while my SCENE Visa still earns 1%, effectively, after April 19th, it'll be about 0.75% in redemption value because I'll have to cough up 1250 points (instead of 1000) for a theatre ticket (3500 points instead of a 2500 for a two adult ticket and concession combo). sf-yell

Cheers,
Doug

March 28, 2019
7:36 am
Oscar
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This seems like another step on the road to the social credit system as used in China. And of course Android users will soon have an app for that. But the CBC article itself is funny and reads like an ad. The atricle is almost a word for word recital from someone at Smith School of business. I copied and pasted his quotes only(the bulk of the story) for context :
"It's amazing and everyone with an Apple iPhone is absolutely going to get it," says John-Kurt Pliniussen of the Smith School of Business at Queen's University in Kingston, Ont.

It's a savvy move to use a smartphone to go deeper into making purchases, Pliniussen told CBC News.

"You're going to get some education. You're going to reduce the costs of all your credit shopping. You're going to have artificial intelligence coach you and help you learn about financing and you're going to get recommendations as to how to budget," he said.

"You're also going to get cash rewards and receipts. It's just delightful. And it's … going to shock all the traditional credit card holders."

He says credit card companies will be scrambling now to match what Apple is offering as paying by smartphone will become the norm. Other credit card companies will be designing an Android app to do what the Apple card does and more, Alexander said.( is this a typo ? , WHO IS Alexander ?)

"One of the most brilliant parts of this announcement is they're branding with Goldman Sachs and also MasterCard which is handling the payment processes on the back end," he said, pointing out that Goldman Sachs already is well-known globally.

Pliniussen sees this as a potential way to introduce teens to credit cards, in part because of Apple's great appeal to the youth market.

"If I have a young child who can't have their own credit card yet then what I would do is if I had an Apple phone I would sign up and show my children you know the process of using it and get them ready for it for the time when they go off to university and need their own credit cards or access to credit. I'd say it's a great learning tool."

I think he's got an I(m)plant

I hope for the student's sake he is only the janitor

March 28, 2019
2:14 pm
Nehpets
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Loonie said
Americans get better shopping deals than we do in almost every way, including credit card deals. ....

As a FL snowbird, I get to see the comparisons continually, Loonie.

There is certainly more selection, although Amazon has levelled the playing field to pretty much offer the same selection in Canada. Most of the time, the price reflects the exchange rate +-, though sales taxes and duties ultimately make the difference.

Credit card cash back is generally only marginally superior in the U.S. with Discover and Chase offering quarterly rotating categories that pay 5%, though the basic rate can be 1% or less.

Other cards from Chase and Capital One will pay a consistent 1.5% and 2% respectively.

On the down side, both Chase and Discover recently removed the insurance benefits from their cards, so no more extended warranty nor price protection. Additionally Discover removed the added cash back incentive program with partnered retailers.

The only real advantage, from my own experience, of U.S. cash back credit cards is there is no minimum redemption amount for the cash back (Chase and Discover) compared to Canadian cards that require a minimum of $20 (Rogers), $50 (BMO) (MBNA) (Meridian Visa) to redeem cash back.

Stephen

March 28, 2019
7:17 pm
Norman1
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Oscar said

I think he's got an I(m)plant

I hope for the student's sake he is only the janitor

He's regurgitating the marketing hype from Apple's marketing department. Not surprising considering he is a digital marketing professor.

As for the substance of the card, nothing is shaking in the credit card world. Apple Card is just a rebranded Goldman Sachs MasterCard. Kind of like trying to shake up the taxi market in Toronto by creating a transportation app that hails cabs from Beck Taxi, Royal Taxi, or City Taxi.

Top It Up looked into the details and found that the 2% cashback only applies to Apple Pay payments that are done through contactless payment. If one can't tap and needs to use the physical card, then it's 1% cashback. That's just another variation of 1%-2%-3% cashback formula diddling: 2% on contactless Apple Pay, 1% on all the rest.

Since one can't tap on over $100 purchases, big ticket spenders would likely find the Rogers World Elite MasterCard, with 1.75% cashback on non-foreign-currency charges, is better.

The app will likely be a dud for budgeting. Challenge with software based on debit or credit card charge data is the software is quite blind from the missing information. Retailers do not ordinarily transmit the items purchased with the credit card charge.

A person or software can see my $52.28 charge at Walmart. But what part of that $52.28, if any, was for groceries, clothing, laundry detergent, or replacement air filters for the car? Without accurately allocating such mixed charges, any spending totals shown by the software for groceries, household expenses, and car costs, for example, are useless. Software industry has a saying: Garbage in, garbage out.

March 28, 2019
8:00 pm
User230
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Norman1 said

Oscar said

I think he's got an I(m)plant

I hope for the student's sake he is only the janitor

He's regurgitating the marketing hype from Apple's marketing department. Not surprising considering he is a digital marketing professor.

As for the substance of the card, nothing is shaking in the credit card world. Apple Card is just a rebranded Goldman Sachs MasterCard. Kind of like trying to shake up the taxi market in Toronto by creating a transportation app that hails cabs from Beck Taxi, Royal Taxi, or City Taxi.

Top It Up looked into the details and found that the 2% cashback only applies to Apple Pay payments that are done through contactless payment. If one can't tap and needs to use the physical card, then it's 1% cashback. That's just another variation of 1%-2%-3% cashback formula diddling: 2% on contactless Apple Pay, 1% on all the rest.

Since one can't tap on over $100 purchases, big ticket spenders would likely find the Rogers World Elite MasterCard, with 1.75% cashback on non-foreign-currency charges, is better.

The app will likely be a dud for budgeting. Challenge with software based on debit or credit card charge data is the software is quite blind from the missing information. Retailers do not ordinarily transmit the items purchased with the credit card charge.

A person or software can see my $52.28 charge at Walmart. But what part of that $52.28, if any, was for groceries, clothing, laundry detergent, or replacement air filters for the car? Without accurately allocating such mixed charges, any spending totals shown by the software for groceries, household expenses, and car costs, for example, are useless. Software industry has a saying: Garbage in, garbage out.  

That is true. It is not a good card for high price purchases.

I am also wondering if online purchases are also 1% or not.

Personally, I think it will shake up the market regardless (if what they say on paper is true).

I am very against fees. They seem to take a very aggressive stance at attempting to eliminate fees all together. It might not eliminate them all but they have a good start and if they are successful they could change how other cc companies do business.

Right now, most credit card companies have a large amount of fees (fx and all kinds from everywhere), high interest rate (around 20% yearly), low rewards (majority of cards are 0.5% to 1% rewards level) and with bad customer service.

One needs to mix and match to build an okay credit card set up. Should really need only two credit cards.

March 28, 2019
8:14 pm
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Nehpets said

The only real advantage, from my own experience, of U.S. cash back credit cards is there is no minimum redemption amount for the cash back (Chase and Discover) compared to Canadian cards that require a minimum of $20 (Rogers), $50 (BMO) (MBNA) (Meridian Visa) to redeem cash back.

Stephen

I found one case where the cashback formula was designed with a sense of humour: The Citi® Double Cash MasterCard.

2% cashback, only if one doesn't default:

  • 1% on purchases plus
  • 1% on the payments towards the purchases! sf-laugh
March 28, 2019
8:45 pm
Loonie
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Nehpets said

Loonie said
Americans get better shopping deals than we do in almost every way, including credit card deals. ....

As a FL snowbird, I get to see the comparisons continually, Loonie...

The only real advantage, from my own experience, of U.S. cash back credit cards is there is no minimum redemption amount for the cash back (Chase and Discover) compared to Canadian cards that require a minimum of $20 (Rogers), $50 (BMO) (MBNA) (Meridian Visa) to redeem cash back.

Stephen  

I lived in the US for four years and was often astonished at the deals available to Americans through various means, but perhaps I'm out of date.
Apparently Marketplace (CBC TV) is going to have something on this topic in next episode. Friday, I think.

March 28, 2019
9:33 pm
Norman1
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User230 said

That is true. It is not a good card for high price purchases.

I am also wondering if online purchases are also 1% or not.

If the online merchant supports Apple Pay as a payment method, then 2% cashback would apply.

If not and the Apple Card's traditional physical MasterCard card number, expiry date, and CVV are used, then the cashback will be 1%.

However, online merchants don't have much of an incentive to add Apple Pay support. After all, Apple Pay is just a wallet and not a credit card. Potential Apple Pay customers will have a regular MasterCard, Visa, AMEX, or Discover card that they can use to pay.

Personally, I think it will shake up the market regardless (if what they say on paper is true).

I am very against fees. They seem to take a very aggressive stance at attempting to eliminate fees all together. It might not eliminate them all but they have a good start and if they are successful they could change how other cc companies do business.

Right now, most credit card companies have a large amount of fees (fx and all kinds from everywhere), high interest rate (around 20% yearly), low rewards (majority of cards are 0.5% to 1% rewards level) and with bad customer service.

Except for the bad customer service, there are financial reasons for those.

There isn't much margin for Canadian credit cards nowadays. Competition has eliminate lots of the revenue. Can't really charge any annual fees unless there is some generous reward program which costs money. Most of the interchange is given back through the costs of those reward programs.

In some cases, cardholders are getting more back in rewards than the interchange they bring in! Tangerine Bank is losing 0.7% a month on cardholders like me who only use their MasterCard for the 2% categories and don't carry a balance.

March 29, 2019
7:22 am
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Norman1 said
After all, Apple Pay is just a wallet and not a credit card.

Apple Pay is all about Apple adding services to their ecosystem AND selling the security aspect of Apple Pay to both merchant and customer.

On a recent trip I used a credit card for 59 transactions:

51 x Apple Pay
5 x Physical Card (transactions exceeded $100 CDN equivalent)
1 x Physical Card (merchant did not accept contactless pay)
2 x Online Purchase (merchant didn't offer Apple Pay)

There were maybe 5 or 6 other times I wasn't able to use Apple Pay or even the Physical Card because either the merchant didn't accept credit cards, period OR the purchase didn't meet the merchant's minimum purchase value.

-------------------------------------------------

Here is the supposed Apple Pay service agreement between Apple and the Canadian FIs, from the Financial Post -

A landmark deal by Canadian banks to embrace Apple Inc.’s mobile wallet payment system Tuesday came on slightly more favourable terms than U.S. financial services firms received, according to a source familiar with the arrangement.

While Apple Inc. will receive 0.15 per cent or 15 basis points on credit transactions — comparable to the widely reported figure for Apple Pay in the United States, which works out to 15 cents for every $100 purchased — a lower fee of four basis points will be applied to credit transactions after an annual payment of 50 cents per card.

April 3, 2019
2:05 pm
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From the National Post -

Greg Feller: Canadian banks are about to have their Apple moment

With the arrival of the Apple Card, there is a new kid on the fintech block — one with one billion installed customers

https://business.financialpost.com/opinion/greg-feller-canadian-banks-are-about-to-have-their-apple-moment

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