EXCLUSIVE DATA: iPhone users want the Apple Card — here’s why its appeal could propel Apple Pay (AAPL, MA, GS)

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A large segment of iPhone users find the newly unveiled Apple Card attractive, according to an informal survey of Business Insider readers from Business Insider Intelligence. Business Insider Intelligence

For context, the card is Apple’s first proprietary card product and comes in partnership with Goldman Sachs and Mastercard. Apple Card is a fee-free, predominantly digital product housed in Apple’s Wallet app and offers tiered rewards, a robust set of personal finance features, and a physical companion card.

Forty-two percent of iPhone users are “extremely interested” in applying for Apple Card. Additionally, just below 15% of respondents show no interest at all, pointing to the product’s broad appeal ahead of its planned launch this summer.
Positive early consumer response indicates that the card could boost Apple’s standing in the consumer payments space. Apple Card’s ability to combine a luxury feel with accessible and affordable benefits could open up a niche for the firm, and other issuers should take note.

Respondents noted the card would make them more likely to pay with Apple Pay, confirming our initial suspicions that the card could give Apple’s mobile wallet a boost.

Business Insider IntelligenceNearly 8 in 10 customers would be more likely to pay with their phones if they had Apple Card. When Apple Card was announced earlier this week, we predicted that the card’s incentive structure — which offers higher rewards for mobile payments than for physical card transactions — and feature set would entice Apple Pay usage and make the wallet a more valuable utility to customers. With half of respondents saying they’d be "much more likely" to pay with Apple Pay if they had Apple Card, it looks like it could be a powerful driver of mobile payments.

Three of the card’s features stand out among iPhone users — an indication of key features issuers should consider as they refresh their own benefits or try to compete with Apple. The card’s premium, luxury feel combined with its more accessible and affordable benefits could appeal to a wide cross-section of users and shed some light on what consumers currently value in a credit card.Business Insider Intelligence

Lack of fees. Thirty-one percent of respondents found the card’s lack of fees — including annual, late, and international fees — as its most compelling driver, surprisingly beating out rewards, which are typicallymost important to customers. Apple Card is one of the only entirely fee-free cards on the market, which could be driving up interest among younger or debt-averse customers who weren’t previously sure they could afford a credit card.
Tiered rewards. The firm’s cash-back structure came in second, with 23% of customers citing this as most attractive, though that’s boosted a bit by the 8% of customers interested in the card’s Daily Cash redemption structure. For Apple, it seems like rewards could be more useful in driving up Apple Pay usage than in bringing customers to the card.
Card design. Eighteen percent of respondents said the firm’s titanium companion physical card is the biggest driver, reflecting users’ ongoing interest in card appearance, which has propelled cards like Chase Sapphire Reserve.

The card’s rewards could give Apple Pay a much-needed boost. Apple Pay, which has been stagnating in the US (it’s oldest and largest market), has been trying discounts, reminders, and other programs to convince users to change their well-established payment habits; this credit card could be the impetus that finally begins to bridge the gap between physical and digital payments.

More to Learn

In the latest annual edition of The Payments Ecosystem Report, Business Insider Intelligence unpacks the current digital payments ecosystem, and explores how changes will impact the industry in both the short- and long-term. The report traces the path of an in-store card payment from processing to settlement to clarify the role of key stakeholders and assess how the landscape has shifted.

It uses forecasts, case studies, and product developments from the past year to explain how digital transformation is impacting major payment processing industry segments and evaluate the pace of change. Finally, it highlights five trends that should shape the payments industry in the year ahead, looking at how regulatory shifts, emerging technologies, and competition could impact the payments ecosystem.

Here are some key takeaways from the report:

Behind the scenes, payment processes and stakeholders remain similar. But providers are forced to make payments as frictionless as possible as online shopping surges: E-commerce is poised to exceed $1 trillion — nearly a fifth of total US retail — by 2023.
The channels and front-end methods that consumers use to make payments are evolving. Mobile in-store payments are huge in developing markets, but approaching an inflection point in developed regions where adoption has been laggy. And the ubiquity of mobile P2P services like Venmo and Square Cash will propel digital P2P to $574 billion by 2023.
The competitive payments industry landscape will shift as companies pursue joint ventures to grow abroad in response to geopolitical tensions, or consolidate to achieve rapid scale amid digitization.
Fees, bans, steering, or regulation could impact the way consumers pay, pushing them toward emerging methods that bypass card rails, and limit key revenue sources that providers use to fund rewards and marketing initiatives.
Tokenization will continue to mainstream as a key way providers are preventing and responding to the omnipresent data breach threat.

In full, the report:

Explains the factors contributing to a swell in global noncash payments
Examines shifts in the roles of major industry stakeholders, including issuers, card networks, acquirer-processors, POS terminal vendors, and gateways
Presents forecasts and highlights major trends and payments events driving digital payments growth
Identifies five trends that will shape the payments industry ecosystem in the year ahead

Interested in getting the full report? >> Purchase & Download It Now