In March 2019, Apple announced the Apple Card at their Special Events Keynote. As a consumer financing solution, we were very interested in this announcement as well. Apple is not introducing a new idea. When Apple introduced the iPod, it was not a new concept. There were other portable devices to play music, Apple just designed one with a greater user experience. That is their goal with the Apple Card as well. Credit Cards are not new, but the Apple Card comes with a promise to increase the experience. While there are several ways the Apple Card can impact consumer habits, we thought these 3 items were the most important for business owners to know.
How will Apple Card effect your Business? Demand for your business to accept Apple Pay will increase. From the press release: “Every time customers use Apple Card with Apple Pay, they will receive 2 percent Daily Cash” and later in the release: “For purchases made with the titanium Apple Card, customers will get 1 percent Daily Cash”. So, yes, your customers can use their MasterCard based Apple Card with your basic point of sale terminal, given it accepts chip based cards. However, they will get double the cash back if that same terminal or your website will accept Apple Pay. We would suggest looking into your point of sale equipment and considering upgrading to a device that accepts Apple Pay. You don’t want to lose customers to a competitor for 1% cash back. If you host a website you can look into adding Apple Pay by reviewing their developer site.
What new equipment will you need to accept Apple Card? At the end of the day, it’s just another credit card. The card is issued by Goldman Sachs and advertised as “Low Rates”. From the Apple Card site the APRs are: “Variable APRs range from 13.24% to 24.24% based on creditworthiness” (Rates as of March 2019). The card uses the MasterCard Network to process transactions. The advantage for your business is, according to Apple, they do not add fees to transactions. This means there should be no additional pass-thru fees over typical card network rates like you see with AMEX, as an example.
Will this replace the need for Retail Seller Financing? It’s not a great solution for larger purchases or a solution that can improve customer loyalty. As an alternative, consider a few key features of a UGA Finance Program. We offer a captive solution for your consumers that gives them an open line of credit to use at only your business. Our APRs are typically more competitive than those of credit card rates. We also offer promotional terms such as “No Interest if Paid in Full within 6 months” and can offer larger credit limits for your customers.
We hope this information is useful for your business planning. If you are interested in the UGA Finance Program, we would love to discuss how it can be used to accelerate your business growth.