The launch of the Apple Card seems to be a strategic move from the tech giant to boost its Apple Pay business. Besides, Apple has collaborated with Wall Street giant Goldman Sachs as the issuing bank for Apple Card. Apple Card is basically a Mastercard-branded physical card to make in-store and online purchases just like any other credit card.
Apple has also introduced the Daily Cash rewards program for users making purchases through ‘Apple Card with Apple Pay’. Analysts predict that Apple Card doesn’t pose any immediate threat to Visa or Mastercard, however, pushing its digital wallet utility can pose strong competition to giants like PayPal, Square Cash, and Venmo.
MoffettNathanson analyst Lisa Ellis, said:
“Apple Card is unlikely to upend the credit card issuing landscape – it is a straightforward co-brand credit card. Apple Card’s most pronounced impact on the payments ecosystem will likely be the extent to which it accelerates the adoption of Apple Pay – an increasingly formidable competitor in the digital wallet landscape.”
Taking the Bull By Its Horn
As said earlier, the Apple Card is not the company’s first step in consumer finance. But Ellis believes that integrating Apple Card with Apple Pay could be disruptive for the digital payments industry.
Ellis doesn’t expect any major shakeup in the credit-card market but thinks that Apple Pay can give its competitors like PayPal, Venmo, and Square Cash, a run for their money.
“Apple Card, if successful, will strengthen Apple Pay, which is one of the leading competitors in the digital wallet market and a rising competitive threat to PayPal, Venmo and the Square Cash app,” Ellis added.
However, considering PayPal’s strong market position, it is easier said than done. Competing with payment industry giants like PayPal will be a big challenge for Apple Pay. This year itself, PayPal (PYPL) stock price has surged over 27% against the Computer and Technology sector returns of 18.80%. This means that PayPal has given over 50% returns against the sector it belongs to.
This shows that PayPal is one of the strong performing companies and to eat into its market share will be a big challenge ahead for Apple.