iCARD: Is an Apple Credit Card The Next Big Move?


If you read the pundits and tip sheets you see all sorts of imaginary scenarios play out for Apple’s next big thing. The three that seem to be getting the most attention include a surprise. The company just rolled out Apple CarPlay, which got some buzz from the recent Geneva Auto Show. It will be fun to see how it plays out. We’ve already heard speculation about a big-screen Apple TV (set). There is always chatter about an Apple iWatch or some sort of wearable from Cupertino. Both are risky and small potatoes compared to the third item: An end-to-end mobile payment system that competes directly with PayPal and most of the established systems already in place. Enter the Apple iCard. Don’t leave home without it. The image above is a parody by Credit Card Compare, but there has been a lot of speculation about an Apple credit card on sites like Seeking Alpha, a website that seems preoccupied with all things regarding Apple finance and stock price.


Here are the interesting statistics that got my attention: “With 575 million active accounts, Apple has more populated digital wallets than any other player in finance. 575 million accounts is 1.37x the total number of MasterCards issued worldwide, 3.5x the number of card holders in the U.S., 5x the number of cards on file as PayPal and 3.4x the number of cards on file for Amazon.” There are outrageous numbers of people who can be easily converted to customers of additional services. Mobile payments overall are estimated to hit a trillion dollars by 2017, according to a report from IDC.


The way Apple users are lock-step and all-in with pretty much everything Apple does, the company would own a huge piece of this market. This speculation by the Apple watchers was apparently triggered by some new e-commerce and payments patents filed by the company. This was combined with backroom gossiping by PayPal and others. In fact, PayPal would love to partner with Apple and be part of the process. That partnership remains to be seen. Whatever the case, if everything actually worked out, some analysts see it adding $60 billion to the Apple bottom line, which is substantial. Apple would now become a financial services company and a bank as well as a manufacturer and a trendsetter. But is this the sort of thing Tim Cook can roll out and expect to excite the Apple community? As time goes by, Cook is seen as more and more of the uninspired corporate apparatchik who is quite disconnected from the average Apple user. Rolling out a mobile payment system and an Apple credit card is the exact opposite of an exciting idea, no matter how good the idea is for Apple shareholders.


First of all, Apple makes most of its income from sales at its retail stores. Running a finance company to handle all the transactions will bring in more profits, but will the stores continue to attract customers if they do not have cool new products to show off? That said, this is a risky bet insofar as continuing profits are concerned. Apple could buy Square to get its feet wet or go all-in with an arrangement with Discover Financial services or even MasterCard. Maybe even consider a merger or acquisition, although the market caps for these publicly held credit card companies are a little high for even Apple to swallow. This whole notion might be the worst move ever—unless the company can somehow make it exciting. Personally, I cannot see how to do it. This is dreadfully dull stuff. Apple does not need the reputation of a boring finance company. What’s next? Insurance? ( By John C. Dvorak from pcmag.com )