The Green Sheet Online Edition

April 08, 2019 • Issue 19:04:01

Readers Speak: Apple's strategy for superior value chain control

Richard Crone and Heidi Liebenguth, CEO and managing partner at Crone Consulting LLC, respectively, shared the following insights with us when Apple rolled out the Apple Card on March 25:

"Apple Card is disruptive: It is to banking what the iPod was to the music industry, what the iPhone was to wireless carriers, iPads were to the laptop industry, or what Uber is to Taxis. This is a seminal moment in consumer credit history. Every financial institution is forced to compete and collaborate with Apple. Apple Pay is the first responder rendering consumer relief with:

1. Instant issuance, mobile account origination. You can apply in the privacy of your own phone.
2. Three accounts in one: not just credit, but debit and prepaid with P2P and ATM cash access, too. When consumers open an Apple Card credit account, Apple also activates Apple Pay Cash and pays the Apple Card reward daily. That stimulates instant usage of Apple Pay Cash, likely to be accessible via Mastercard's Maestro ATM Network. It's essentially a new account bundle: credit combined with debit and prepaid, following in the footsteps of PayPal and Venmo, with a slicker user interface. iMessage enables semi-social payments, similar to Venmo (we see Venmo as essentially a public ledger recording informal loans and repayments between friends and associates).
3. Customized credit: you set the terms and can change them any time; you control speed of debt repayment and ultimate interest paid.
4. Rich cash rewards – richer for Apple Pay usage, lesser for the EMV-only card.
5. Transparent pricing and no fees.
6. Ultimate responsiveness through text and response. The iPhone screen shows spending, along with trends and categorization, and enables you to manage all features on your phone.

"Goldman Sachs is providing credit, just as Discover provides the prepaid account behind Apple Pay Cash. Apple is exerting branding control and providing a superior user interface for a responsive customer experience."

Insights welcome

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