by Jean-Louis Gassée

Does the world need a new credit card, especially one without any outstanding perks? The answer lies in the way the Apple Card works rather than in the number of miles or the cash rebate percentages.

A couple weeks ago I absent-mindedly looked at the Wallet app in my iPhone and noticed something new: A gestating Apple Card had silently landed in my Wallet. I dutifully followed the instructions to actualize it. The process would have been faster were I not old and slow, but it was simple: birth date, address, income, last four digits of my SSN… Within minutes I was approved with an adequate credit limit and a 12.99% interest rate — I’m told this is a good rate for credit cards.

I replaced my former standard credit card with the Apple Card for everyday transactions and began to see small amounts of cash flow into the Cash bin in my Wallet. 2% in places where Apple Pay works (I didn’t need a physical card), 1% where Apple Pay doesn’t work, and 3% for Apple purchases such as my iCloud storage payment.

Four days later, I got the physical card and experienced another instance of simple on-boarding: Place your phone at the bottom of the white (of course) envelope containing the card and you’re done, card activated.

My spouse requested a card when it became available to all comers last Tuesday, and the on-boarding was even easier. The card came in three days and appeared to have been already activated in her Wallet app, no envelope magic trick.

Explaining the difference is above my pay grade and, as long as everything works, is immaterial. Googling “Apple Card on-boarding” and “unboxing” confirmed that the on-boarding experience is universally pleasant.

Now, after a little less than two weeks using this new payment system, I’ve begun to hear grumblings from the usual places about the Card’s weak points, some more important than others.

First, we have the usual “It’s Not Really Innovative!” grouse. For this you may have fun re-reading a September 2012 Monday Note titled Apple Never Invented Anything. As the date and title imply, the jibe is old. But the myopia never dies.

A more serious complaint is the lack of a web version of the Wallet app that’s only available on your iPhone and iPad. What happens if you lose your phone? How do you pay your Apple Card bill? The current answer is you must call Apple’s customer support, give your credit card number — if you remember it — and proceed from there. Security is a consideration, of course, but many banking transactions are performed through a browser, so it’s hardly an unknown issue. It’s just the beginning of the Apple Card; let’s hope the answer will change.

On the lighter side, we have the revelation that, Mon Dieu!, blue denim (bleu de Nîmes) from blue jeans (bleu de Gênes) might transfer some of its coloring onto the card! The warning is contained in an Apple Support page that also cautions us about contact with leather, loose change, keys, or magnets that might demagnetize the track on the back of the card. This can be annoying, it happened to one of my cards on a European trip, partially demagnetized, meaning it sometimes refused to swipe. (The same card looks rather grotty and has started to delaminate after less than two years, but it still works on chip terminals.)

As one can imagine, Apple’s overabundant cautionary statements proved good clickbait fodder, leading one commenter (who should know better) to compare the Apple Card’s “vulnerabilities” to the old iPhone 4 antenna problem. Big difference: Apple let users discover the antenna problem on their own, which led to a hasty press briefing that resulted in You’re Holding It Wrong jokes. In today’s case, Apple obeys the Tell It Now, Tell It All, and Tell It Yourself Law. In the end, much ado about not much.

The most important grumble is that there are plenty of credit cards already, cards that offer better rebates, sign-on bonuses, airline miles, access to lounges, special treatment of expense categories, interest rates, grace periods… There are entire sites, such as Nerd Wallet, that are dedicated to the fine art of gaming the credit card system, a fun pursuit if one has the inclination and time. Fun and legitimate — and I’m not just being polite. The credit card industry is better known for its tricks than for its transparency and bonhomie. Credit card issuers present themselves with big smiles, but we know they have sharp teeth.

When it comes to rewards, the critics are correct: None of the Apple Card features and benefits top what other credit cards offer in this very diverse and fast-moving industry. And this is where the kommentariat get it wrong. Rewards isn’t the game that Apple Card is playing.

For a sufficiently large number of Apple customers, the new payment system is a classic How vs What proposition — and the “How” wins. The Wallet app offers complete control over purchases, payments, rebates, timing, and security, all in one place. As for security, three different card numbers track purchases made with the physical card, with a card number on line, or with Apple Pay on your Watch or iPhone. No need to use a special third party app, such as the excellent Mint. Everything is built into the Wallet, itself built in every iPhone and iPad.

And it’s amazingly fast: Purchases appear within seconds, rarely more than a minute. The speed leads to some idiosyncratic behavior: You add a generous tip to your restaurant bill, but what instantly appears in your Wallet app is the original total. The total-with-tip appears within hours or a day. Also, for reasons that evade mere mortals, some purchases are noted as “pending” for a day or more.

After less than two weeks, I find the experience pleasant and well orchestrated. I particularly appreciate being able to pay off my balance quickly and easily. Being French and formerly poor, I can’t stand credit card interest.

What does the consumer finance industry think about Apple’s foray into their world? There’s no hard evidence, but after I started using my Card, I noticed more aggressive credit card ads almost everywhere I navigate on line. The new player from Cupertino must be making an impression.

In the coming months, we can be sure to see one Apple exec or another run a victory lap, sharing impressive user and transaction numbers. This will lead to speculation about Apple’s role in the financial services world. Right now, Apple’s partner is Goldman Sachs, an honorable and venerable company but a newcomer in the consumer finance sector. Is this a trial run, and for whom? For Goldman Sachs using Apple as a launching pad into a new sector? Or for Apple using Goldman Sachs before taking matters into its own hands, such as becoming a Think Different consumer bank?

If I were in the consumer finance industry, I’d think long and hard about Apple playing the How vs What game in my territory.

— JLG@mondaynote.com