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Apple recently announced details about its new upcoming product, the Apple Card. So, I will be talking about apple card in this post.

Overview

The apple card is a credit card by Apple, not by a bank. It has 2 forms. One that resides on your iPhone, other is a physical card and both of them are linked to the Apple Pay.

You can watch this video to get complete details about the card. I suggest you watch the video before getting into the analysis part.

Analysis

I will get right into analysis. It will go like this. I will analyze every single statement given by Apple about Apple-Card. This will make the analysis very clear.

Lets get started!

Opening line in apple’s apple card page.

A new kind of credit card. Created by Apple, not a bank.

I have never seen any product which starts with a lie. Obviously a credit card cannot work without a banking system. Either Apple should open it’s own bank and start this system or collaborate with a bank. According to their statement, they should have setup their own banking system. But they have not, none we are aware of. Apple is collaborating with Goldman Sachs. Goldman Sachs is an American multinational investment bank. It is an unbelievably powerful bank. It is one of the largest banking entities in the world and it is here to make more money. They won’t tell you this anywhere in the video whose link I have put above.

Let us continue.

It represents all the things Apple stands for. Like simplicity, transparency, and privacy.

I have not used Apple products. So, I don’t know. Let us assume they are amazingly simple to use. But yes. Apple-Card definitely stands for simplicity. It is soo easy to use and it really gives that comfort to the user.

Apple has opensourced XNU, the OS X kernel. It has also opensourced a few other tools. But there are a lot of components which are still proprietary. This is the unofficial github org. Check it out. I appreciate Apple for this. But there are bigger things which has made me rethink about transparency. As you will see, like any other big company, not everything about a product is made transparent to its potential consumers. If you are talking about absolute transparency, then people mostly won’t buy the product. This article aims to provide absolute transparency.

Let us talk about Privacy in a later section.

That is a very short analysis on what Apple stands for. Let us continue with Apple Card.

It builds on the incredible ease and security that millions of people love about Apple Pay.

The Apple-Card is built on top of the Apple Pay, which is Apple’s e-wallet.

And it’s the first card that actually encourages you to pay less interest.

I will come to this in a bit.

You can buy things effortlessly, with just your iPhone. Or use the Apple‑designed titanium card anywhere in the world.

Why should you buy Apple-Card? Let us see how Apple answers this question.

The power of iPhone. In a credit card. Apple Card lives on your iPhone, in the Wallet app. And that makes all kinds of new things possible.

You can sign up in no time and start using it right away with Apple Pay. For every purchase you make, you get Daily Cash. And it really is cash. So you can spend it however you want, right from your iPhone. Have a question? Just text. It’s that simple.

We got one point. For every purchase I make, I get cash. Free cash!! Who doesn’t love free stuff!? I don’t :P . There is a catch here. At the bottom of the webpage, it says Daily Cash is subject to exclusions, and additional details apply. This means, they have all the rights to stop Daily cash whenever they want and you cannot complaint about it. I don’t know what other details apply. So, thats the truth.

Another point. If you have any doubts regarding the card, it is just a message away. You don’t have to call the bank’s customer care and break your head.

You’ll know so much more about your spending. At a glance. See a charge you don’t recognize? Tap to pinpoint it on a map.

These are again good reasons. You will exactly know how and where you are spending money. Amazing!

Everything you buy gets a category and a color.

Personally, I wouldn’t care much about this. How does this matter in my decision of buying the card?

Daily Cash. No points. No gimmicks. When you buy something using Apple Card, you get a percentage of your purchase back in Daily Cash. Not a month from now, but every day. There’s no limit to how much you can get. And it goes right onto your Apple Cash card, so you can use it just like cash.

Looks like they are depending a lot on this cash back scheme they have put up.

No fees. Not even the hidden ones.

We will come to this in a bit.

The first credit card that actually encourages you to pay less interest.

This is where it hit me. Why should anyone pay any interest? Interest is money you are paying from your pocket to some bank because you used a credit card. I will come back to this point in a bit.

A new level of privacy and security. Apple Card is designed to make sure you’re the only one who can use it. All the advanced security technologies of Apple Pay — Face ID, Touch ID, unique transaction codes — are built right in. And the physical card has no numbers. Not on the front. Not on the back. Which gives you a whole new level of security.

The new thing is that physical card has no numbers. This made me to think how ATM cards work? Will it work irrespective of the number being printed on the card or not? Because in a shop, the same card reader will be used to read all cards including Apple Card. Turns out, the card need not have the number imprinted on it for the card reader to read it. It is probably on most of our cards for convenience. The Apple Card will definitely have that 16-digit number. It has the magnetic strip and the chip necessary for card readers to read the card. It is not imprinted on the card. This is a smart move by Apple.

A titanium, laser‑etched, Apple‑designed credit card. And Mastercard is our global payment network, so you can use it all over the world. For apps and websites, there’s a virtual card number in the Wallet app. It autofills for you when you’re using Safari.

So, that is how online payments are taken care off. Thats great!

And at the end of the webpage, we discover that Goldman-Sachs is its partner.

To create a different kind of card, we worked with a different kind of partner. Every credit card needs an issuing bank. To create Apple Card, we needed a partner that was up for the challenge of doing something bold and innovative. Enter Goldman Sachs. This is the first consumer credit card they’ve issued, so they were open to doing things in a whole new way.

So, you know why I called the first line a lie. They have told that “This is the first consumer credit card they’ve issued”. So, it might have Apple’s name on it and Apple might manufacture it, but it is Goldman Sachs’s card, they are issuing it.

With this, the webpage ends.

So, that was about what we saw in the webpage.

I want to go a little bit deeper and dissect this for you.

The product seems amazing! It is so easy to use, encourages you to pay less interests, you get free cash on every single transaction you make using it. It is good. It is so good that it scratched that part of my mind that doesn’t allow good to exist without condition (I love Mr. Robot :P). This is a true statement in today’s world.

At every step, if the consumer is benefiting, how the hell will Apple make money? At the end of the day, they will offer a good product to make money. At first, I was not able to see what is going on. But after some time, I saw it. It was right there, in front of my eyes.

They are offering a credit card service !!

Let us go deeper.

1. Why a credit card?

Let us understand what a credit card is, how credit card companies make money.

Normally, if you are working at a place, you would have a bank account where your salary would get credited every month. You would have a debit card linked to that account which you can use to spend the money you had earned. It is your money. You need something, you buy it with your money using that debit card.

Where did the credit card come from?

The concept is simple. Suppose you want to buy a product from the store and you don’t have money for whatever reason. You could use the credit card and buy that product from store. You didn’t have money, then who paid the store? The bank paid on behalf of you. At the end of this month, you will have to pay the bank that amount, along with some fees. The fees is the money the bank makes.

So, thats how a credit card works. The credit card industry grew very quickly.

People wanted to buy more stuff, they wanted to buy more than the amount of money they had. They used credit cards.

Modern credit card companies have different ways of charging that fees. Generally, if you only buy stuff using credit card and pay the bank within the given deadline, you pay no fees. Note that only people with financial discipline will be able to this. If you draw cash using the credit card, some fees will be imposed on it. There are many such rules.

So, how do banks make money?

For every transaction made using credit card, the bank gets a percentage of money as transaction fees. This is known as credit card rate.

If you don’t pay the balance within the given deadline, you have to pay overlimit fees. It is a fine. There are so many such fines.

One huge problem is credit card debts. If one is not able to pay the balance within the given time, debt builds up. The truth is, credit card debts can destroy you if you don’t take care. This is one of the main ways the banks make money. They make huge money because the amount you will have to pay will be way higher than your principal.

So, the bank is just waiting you to fuck up. What a system :(

I found this wonderful article about credit card debt. I urge you to read it. It will explain everything in good detail.

Coming back to our question, why did Apple choose a credit card?

We have the answer already. It is the best money making scheme.

As I mentioned above, you should have financial discipline to be sage and not become a victim. But it is seen again and again that people get tempted to use that damn card and fuck up. Did you know that there are people who are addicted to shoppping? It becoming a disease. It has been given the name - Compulsive Buying Disorder. Obviously, you can’t endlessly shop with a debit card because you will spend up all the money. But a credit card, woww! It is unlimited supply. You don’t even realize you are fucking up.

Apple is making it even easier to fuck up. Their strategies are amazing. Let us revisit a few points again.

And it’s the first card that actually encourages you to pay less interest.

Why the fuck should you even pay interest?

You pay interest because you are using the credit card. You are spending money that you don’t have and paying it back to the bank.

Most credit card statements emphasize your minimum amount due. And if you pay just that, it costs you a lot in interest over time. Apple Card is different.

When you’re ready to make a payment, Apple Card estimates the interest you’ll wind up paying, based on any payment amount you choose. And it does it in real time, so you can make an informed decision about how much of your balance to pay down

There is something called a Minimum Amount Due associated with a credit card. Suppose your credit card statement says you have 100$ of principal amount to pay. And you don’t have so much money. To keep your credit card account alive and working, credit card issuers tell that, you pay some minimum amount at the end of this deadline, else your card will be revoked. Think the Minimum Amount Due is 20$ and you pay it. Does this mean 100$ became 80$ now? There is the catch. Most of the money you pay as Minimum Amount Due will go as interest and a very less fraction of it goes in as principal. So, say 16$ went as interest and 4$ was used to pay up the principal. You finally have 96$ of debt for the next deadline. See what happened? Do you like this? This is how they make huge money. By charging huge amount of interest if you don’t pay up the balance in time.

But Apple Card is different. It doesn’t have the concept of Minimum Amount Due. So, it doesn’t specify the minimum amount of money you have to pay every month to keep your credit card and account alive. They what does it do?

At any given moment, if you want to pay some X$, Apple Card will instantly tell you how much interest you have to pay for that. And then you pay those X$. This will help you make an informed decision. Great!

Simply spending the money you actually have(debit card) will actually solve everything. People fall into traps of wanting something costly, something they can’t afford and use a credit card.

Daily Cash. No points. No gimmicks. When you buy something using Apple Card, you get a percentage of your purchase back in Daily Cash. Not a month from now, but every day. There’s no limit to how much you can get. And it goes right onto your Apple Cash card, so you can use it just like cash.

This is the worst. You spend a thousand dollars and get a dollar cashback? And you think this is good because this is free money? All cash back schemes by these products start by rewarding high percentage in the beginning. As more and more people start using it, they reduce it and finally stop it. It is something we have already seen with other e-wallets.

The wallet is beautiful, it show statistics, graphs etc., which will make you feel you have everything under control. But, you will only realize it after you lose control.

I will end this with a last point.

Debt collection: Never assume companies are nice looking at their nice, consumer friendly advertisements. They will do everything for you to start using. That niceness will stay till you pay up your balance properly and move on. Once you fuck up, that niceness will undoubtedly vanish, because they cannot to afford to lose money - they are here to make profit. Coming to Debt collection. This is probably most embarassing thing when people come to your home and ask for money. Fuck embarassment. People don’t care to harass you to pay money. Debt and Debt collection is the dark part of using credit cards. People succumb to pressure and die. The US government realized that this might go out of hand and came up with a rule. This article will give you some details.

So, that is why a credit card and not a debit card. They can make more money this way.

2. Does Apple card really offer something different?

Let us see.

The Apple Card comes in two forms. The e-wallet form and other is a physical card form. Any payment can be done through either of them.

Now, consider a scenario where you just have a normal debit card at hand and you have an iPhone. You can use the Apple Pay application and link it with your debit card. That way, you can use Apple Pay to pay for stuff. Even here, you now have a physical card and an e-wallet.

What is new in what Apple is offering?

They are offering a credit card, with free cash for every transaction you make. - You know enough about credit card. It is your choice to use it or not.
They are offering an ultra-stylish card - Should this really matter?
They are offering security by removing the card number - Let us say Apple has the upper hand on this.
The wallet features for Apple Card is amazing, colorful and you will be fully under control. According to me, this control is an illusion they provide. If you use your debit card, you will actually be under control - real control because you cannot spend the money you don’t have when it comes to a debit card. But here, they encourage you to spend money you don’t have. You have to choose between which control you want.

So, Apple is not really offering something new, unlike the way it offered iPhone, iPad, Mac back then.

3. What about Privacy and Security?

This is very interesting. This is the part I want to talk about. This page provides a potential consumer information about the Privacy and Security of Apple Card.

Let get started.

It represents all the things Apple stands for. Like simplicity, transparency, and privacy. Every Apple product is built from the ground up to be secure and to protect your privacy. Apple Card is no exception.

Privacy? Apple’s selling point these days has been that it protects privacy. Tim Cook has also told that privacy is a human right. Lets talk.

In 2017, Apple removes all applications from its China store which helped users to evade censorship. I know, its China. Nothing can be done without the government’s words. The Applications are not some game apps or any other apps. They were VPN applications. They are in a way here to protect one’s privacy. But they were removed because they were illegal. Apple should acknowledge this upfront. Link to the article. This is the hackernews link. It has a good discussion about this if you are interested.
This guardian article reported that a NSA program tapping into user data of Google, Apple. I insist you on reading the article. You will know whats going on. The world’s largest survielance org says they are tapping data from Apple and here is Apple’s CEO saying privacy is a human right. What irony! Apple continues to live in denial by saying stuff like they have never heard about Prism, the program by NSA.
It is a known fact that companies give access to user data to third party application developers. Is that a good move on protecting user’s privacy? This scheme brings in huge money to the company. Facebook and Google also use this scheme.

With all this, should I really believe that Apple protects my privacy? I don’t know.

When you first get your Apple Card, a unique device number is created on your iPhone. Then it’s locked away in the Secure Element.

This is interesting. I genuinely want to learn more about this.

Every purchase requires your device number along with a one‑time, dynamic security code that iPhone generates when you authorize the purchase.

And how do you authorize a purchase? Effortlessly, with Face ID or Touch ID — two of the most advanced security technologies in the industry. So even if someone else gets ahold of your iPhone, it can’t be used to buy anything.

I would like to learn more about the first point. I want to know how that dynamic security code is generates and how it is used to authorised the purchase. We won’t know about this till they release the product.

The second is effective in protecting your wallet. Good point.

It’s hard to steal a credit card number when you can’t see it.

This will definitely be one of the best selling points of Apple Card. This is really good.

Even Apple doesn’t know what you bought. Or where. Or how much you paid.

At Apple, we firmly believe in your right to privacy. That’s why we created a unique architecture for Apple Card that generates things like your transaction history and spending summaries right in the Wallet app on your iPhone.

Obviously, Apple doesn’t need to know. Goldman Sachs is handling everything and they should have an account of everything.

Of course, Goldman Sachs will use your data to operate Apple Card. But they will never share or sell your data to third parties for marketing or advertising.

This is great to know. I feel protected.

That was my analysis on Apple Card.

My opinion

Though it was a ranty analysis, I didn’t do it without basis. Most of what I have stated have sources and facts to back my arguments and I request you to read them before coming them to conclusions.

The following is my actual rant, my opinion, could be wrong.

1. Apple is just a middleman between consumer and Goldman Sachs

Goldman Sachs is the bank issuing the credit cards, the consumer is the one using it. This is the first time Goldman Sachs is issuing consumer credit cards. So, they needed an amazing platform to put forward their credit cards. Because there are already multiple banks which offer credit cards. If they do their normal thing, they will become one more company which issues credit cards. Here comes Apple. Apple gives a whole new face to that normal credit card. It gives the card the glossy Apple coating and makes it beautiful. Makes it so beautiful that it hides all crooked, dangerous features of a credit card. In my opinion, Apple is just a middleman between consumer and Goldman Sachs. The Apple brand is being used to market the product. They made a nice beautiful wrapper around a dangerous bomb!

2. Apple-Card is no exception - Regarding Privacy protection

I hardly think so. There are reasons why I think that way. First is, Apple just speaks about protecting privacy, but fact is it doesn’t. None of the big companies are bothered about users’ privacy. Assume they respect your privacy and don’t look into the wallet.

Goldman Sachs has all your data. It has an account of where you have spent how much and more. It was told in the end Goldman Sachs will never share or sell our data to third parties for marketing or advertising. Every single company tells the same fucking thing and we believe. Fact is, GS doesn’t have to sell the data. It can use the data to make more profits. It can closely observe the spending patterns of a person and offer loans, schemes etc., If that person falls for that loan, they make more money!

Google made a deal with Mastercard saying we will give you money and you give us all the transaction details of huge number of users. Why? Advertisements. This article reports the details of that deal in detail. When they are doing it, there is a very good chance that Apple will also do it. Its partners Goldman Sachs has the data. Why wouldn’t they use it is my question.

Nothing is known as of now and all this is just my thoughts. We will have to wait and see how it turns out after the product is released.

3. Apple doesn’t really care about it’s users

If it really really cared about it’s users, from all it’s heart, then they would not have come up with a credit card scheme. Because everyone knows credit cards(or anything involving credit, loans) will drain more money from the user than he/she gets. We have to understand that it is a business, there is a fierce competition. So, they have to battle, do whatever to get more profits. There is always a trade-off between making more profits Vs thinking about users and actually doing good.

4. Regarding the Daily Cash scheme

They say,

Daily Cash. No points. No gimmicks.

When you buy something using Apple Card, you get a percentage of your purchase back in Daily Cash. Not a month from now, but every day. There’s no limit to how much you can get. And it goes right onto your Apple Cash card, so you can use it just like cash.

This is the best. For every purchase, you get daily cash. I am finding it difficult to understand this. Suppose you brought something today. You get some cash. What this tells is, you get daily cash for that purchase. What is it supposed to mean? Does it mean, even after 10 days after this purchase, I will be getting cash daily for that purchase I made 10 days back? Or does it mean they want to purchase something every single day so that you keep getting daily cash?

It is not clear. They have intelligently coupled Daily Cash(ooh! I get free cash everyday) with cash-back on every purchase(what!? I also get a discount?). It is not clear what they mean. Once it is released, we will for sure what they meant.

5. Regarding Apple Card not having Minimum Amount Due

Most credit card statements emphasize your minimum amount due. And if you pay just that, it costs you a lot in interest over time. Apple Card is different.

When you’re ready to make a payment, Apple Card estimates the interest you’ll wind up paying, based on any payment amount you choose. And it does it in real time, so you can make an informed decision about how much of your balance to pay down

There is something to note here. When it comes to traditional credit cards, there is a fixed billing period - say every month end, you have to pay up. But in Apple Card, there is no talk about it. Minimum Amount Fee tells you that you have crossed your limit and you will fall into debt soon. It is a warning. But in Apple Card, “whenever you are ready”, it will tell you the amount of interest you have to pay for a given amount of principal. What happens if I spend 10000$ and am not yet ready to pay? That is the dark side of credit card system and they obviously don’t want to talk about it.

What I am trying to convey is, the Minimum Amount Fee atleast scared you into paying something, thereby reducing the debt by a little amount. But here, they are telling they will wait till you are “ready to pay”. People with financial indiscipline will probably “never” be ready to pay up. What will they do in such cases? Either they have to revoke the card and account or have to fine them more. I think this might end up being more penalizing than normal credit cards.

Conclusion

I can go on talking about these issues. But will stop here.

The idea was to give a 360-degree analysis of Apple Card. Problem is that they only show what they want people to see. They want people to just see the nice, glossy coating they have put in that bomb which is almost always a trap. I wanted to rip it off and show whats actually inside, what that product actually offers.

No matter what I say or any one else says about credit cards or Apple Card, their disadvantages, people are going to fall for it, they will be victimized. Everyone have gotten into a habit of wanting something or the other. The society is being constructed that way - cannot help it. Just want to buy stuff without thinking. This mentality is being exploited. People’s financial indiscipline will be exploited to the fullest, worst case till they give up on real assets such as their homes to pay the debt.

With that, I will end this article.

Make a responsible decision. You don’t have to use anything and everything that comes along. And nothing easy and amazing comes for free. You will be paying a price directly or indirectly.

Thanks for reading!