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Apple playing the long game’ with digital credit card and push

(Credit: Apple)

Apple announces a new digital credit card service for iPhone users this week in what CEO Tim Cook described as “the most significant changes in the credit card in 50 years.”

While that is exaggerating it a bit, the move is a very interesting Apple and highlights his plan to attract users in a bunch of different services to keep them so that the iPhone users.

For now it is only available for customers in the U.S. and Apple is hoping the more iPhone customers to use Apple Pay for purchases within the iOS-ecosystem, such as the App Store, micro-payments in games, and peer-to-peer payments with Apple Cash, a feature that is only available in the US.

When customers use the card they get 2% cash back on all purchases and 3% on the purchase of an Apple product or service.

According to Apple, are digital credit card-no extra costs, no annual fees, no international fees and an interest rate to the lowest in the industry, but the small print on this last point gives it a pretty standard range of interest.

That sounds all very good, but a lot of the features aren’t actually new, but rather an evolution of the reward and compensation structures that are offered by other cards in the U.S. market, critics were quick to point out.

“I think that the strange optical here is that credit cards are not necessarily innovation in the payments, even with better rates and loyalty,” Rivka Gewirtz Little, global research director at analyst firm IDC who specializes in payments, told The Verge.

“So to see a big tech company, which hangs its hat on innovation, for example, go a traditional route — that is what I think is a little strange here. I would love to see Apple be more innovative in transforming the way we pay.”

Apple has a partnership with global investment bank Goldman Sachs and Visa to the Apple Map to life.

“There are a number of things about the credit card experience that would be so much better,” Tim Cook said during the announcement. The card will decode statements into something that is easier for people to read and understand and will automatically group purchases into categories and help customers keep track of and develop insight into their spending habits. And what’s interesting is that Apple says that none of the purchasing data will be shared or sold to advertisers or third-party data brokers.

Although it may not be the revolutionary change that Apple makes it out, it’s an interesting boost to the tech giant’s digital wallet.

As a former Visa exec, Peter Berg observed, the pressure to keep the payments within the Apple ecosystem could turn out to be sure for card networks, if Apple succeeds in the long term.

“Apple is pushing people to keep money in the Apple ecosystem is not to be underestimated!”, he wrote on Twitter.

“They are playing a long game here. If successful, this is very bad for the card networks.”

Apple Map is unlikely to come to Australia any time soon, but it will be interesting to see if the the desired result for the iPhone-maker.

On the top of the redesigned TV app and original content streaming service, the company also announced a new service for magazines, and a few major US newspapers this week. For $10 per month in the U.S., subscribers can get cover-to-cover access to approximately 300 major titles such as the Los Angeles Times and Wall Street Journal. It will come to Australia in the second half of the year, but the pricing is not yet known.

Apple will share the revenue with publishers in a secret commercial agreement. In a note to investors, Goldman Sachs analyst Rod Hall said that it was unlikely that the new services would boost Apple’s profits in the short term, but “are interesting from a platform churn point of view.”

If iPhone sales (and the sales of smartphones in general) are slowing, Apple wants to pull you deeper into the services of the ecosystem and make you interest in leaving. When you get around to buying a new device, then you will need an iPhone.

It is also expected that Apple would one day bundle them together with the other services, such as the Apple Music, iCloud storage, and Apple Warranties has to offer for a reduced super Apple bundle.

This story was previously published in the news.com.au.

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