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Apple Card's underwhelming features won't spark Google, Samsung copycats

Payment experts say the card probably won't draw in savvier consumers, which means Apple's chief rivals won't rush in to compete.

2019-03-25-10-40-04

Apple CEO Tim Cook launches Apple Card.

Screenshot by Jessica Dolcourt/CNET

The hot new thing in payments is... plastic?

Apple on Monday introduced the Apple Card, a credit card that exists as both a virtual card in Apple's Wallet app and a physical card (to be fair, it's titanium not plastic). Apple's card comes out after digital money companies PayPal, Square and PayPal-owned Venmo all introduced their own physical credit, debit and prepaid cards in the past few years.

Surely all this excitement for good ole reliable cards means Google and Samsung won't be too far behind, trotting out their own Google Pay Card and Samsung Pay Card, right? Well, not so fast.

Wipe away the Apple mystique, and you're left with a credit card that's got underwhelming features and is unlikely to draw in savvier consumers, several payment experts say. That means its chief payment rivals probably won't rush to come up with competing cards.

"I doubt that Google and Samsung are losing a lot of sleep over this card," said Ted Rossman, analyst at CreditCards.com, a card comparison site owned by Bankrate.

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The Apple Card arrives at a time when adoption of mobile payment services like Apple Pay has stagnated for years, with most US customers instead opting for simpler cash or cards. The lack of ubiquity is a major hurdle for mobile payments, since many customers would rather pay at checkout with what they know will be accepted, not ask over and over again if a mobile option is available.

The physical Apple Card could help solve that issue, since cards are accepted at just about every store. The card is an acknowledgement from Apple that mobile payments haven't caught on just yet. Less than a third of iPhone owners have used Apple Pay at least once, according to a study by PYMNTS.com.

The Apple Card also illustrates how the tech industry needs to work in the present while trying to usher in the future. Tech companies like Amazon building stores is further evidence that consumer habits take time to change and that there's still money to be made using old-fashioned, nondigital methods.

No Google or Samsung

Considering a potential Google or Samsung card, payments experts mostly saw challenges for the two companies. The credit card industry in the US is heavily regulated and extremely competitive, preventing tech players from diving in. Plus, neither company has the same fanboy-fueled brand power as Apple or a bunch of its own retail stores, making things even harder for them to create waves in payments.

Google did offer a physical debit card for Google Wallet, a predecessor of Google Pay, but it shut down that program in 2016. Also, Samsung runs a credit-card company called Samsung Card in South Korea.

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A look at the Apple Card in the Wallet app.

Apple

"My gut on that is they wouldn't necessarily jump in unless they saw that this Apple move was successful," said Matt Schulz, an analyst at CompareCards, a LendingTree-owned card comparison site.

But Rivka Gewirtz Little, a payments analyst at research firm IDC, said she wouldn't be surprised to see Google and Samsung show off their own cards soon, since big tech companies are looking for more ways to push into the financial world and create more services to get people to spend money.

"I don't see any reason why they wouldn't do it," she said. "I don't think there's any mistake in doing it."

Apple declined to comment for this story. Google and Samsung didn't respond to a request for comment.

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Apple Card: Meh

The Apple Card, which will be available in the US this summer, gets rid of annual fees, late fees, over-limit fees and international fees, and it won't raise your interest rate if you miss a payment. The card also offers daily cash rewards, with 3 percent back when buying directly from Apple, 2 percent back when paying through Apple Pay and 1 percent back when paying using the card.

The company also touted the Apple Card's security features, with each digital payment authorized using Touch ID or Face ID and a onetime security code. Apple also won't collect customers' data on where they shop, what they buy or how much they spend. Apple teamed up with Mastercard and Goldman Sachs to offer the card.

Mastercard spokeswoman Chaiti Sen said her company expects to create more digital-first cards like Apple Card eventually but confirmed that Mastercard is working only with Apple on such a concept right now.

Several payment analysts thought Apple Card's features were far from game-changing and said other, existing cards offer similar, if not better, benefits. The lack of a sign-up bonus -- typical these days for a credit card -- was seen as a missed opportunity.

"A lot of the Apple Card stuff just feels like a series of half measures," Rossman said. "I'm surprised they didn't go all in on something."

Apple clearly wants to use the card to get more people to use Apple Pay and keep them loyal to its ecosystem of products and services. These experts didn't think it offers enough to do that. Considering that, the pressure for Google and Samsung to move on their own cards isn't as great as if Apple had introduced a card that could shake up the card industry.

"It's definitely not enough to make people jump over," Little said of Android users. "It might be enough to get iPhone users to stick around a bit longer."

Originally published March 27, 5 a.m. PT.
Correction, March 28:
Apple won't raise your interest rate if you miss a payment.