“Rocketbank” from Apple: why in the USA everyone was surprised by a card with a cashback and an application that has existed in Russia for a long time

It seems that this is a rare case when America is catching up.

At the presentation of services on March 25, Apple introduced Card – a virtual credit card with a daily cashback for purchases, convenient statistics in the application and support via chat. To use it, you only need an iPhone: it is enough to order a card in the Apple Wallet application and after a few minutes you can pay with a credit card wherever Apple Pay is accepted.

Apple Card spent the least time on the presentation, but presented no worse than other services. In addition to the virtual card, Apple also showed physical titanium without numbers, terms and CVV codes – all this is stored in an iPhone, without which the card does not work. It is needed for places where there is no Apple Pay.

When Apple representatives from the stage told how convenient it is to watch the statistics of purchases in the application, the audience in the hall applauded loudly. From the outside it might seem that the credit card from the company interested journalists more than the streaming service TV +. This is partly confirmed by watching the news on the presentation: How to tell the chief editor of The Verge Nilay Patel (Nilay Patel), the most widely read material was the note about Apple Card

Why the announcement of the Apple Card causes a smile in Russia

If the American media, basically, enthusiastically accepted the Apple Card, then in Russia they rather laughed at the announcement. In the media and social networks, the service was compared with Rocketbank, Tinkoff Bank, Sberbank and other Russian banks, many of which had a cashback, developed mobile applications and a convenient Internet bank a few years ago.

And this is indeed the case when the US is in the number of catching up. In America, the first bank appeared more than 200 years ago, but organizations are still in no hurry to keep up with the progress. Almost no story about moving to the United States from Russia is complete without mentioning the outdated interfaces and limited functions of bank applications, the need to pay for services (for example, housing and communal services) with paper checks by mail, and the long wait for aissued card.

In Russia, the banking market is a rather young phenomenon: the first commercial banks appeared in the country back in the days of the Russian Empire, but then the times of the USSR came and the state nationalized them. Banks returned only in 1988 – at the end of the era of the Soviet Union and thereforeimmediately got used to working in more or less modern technologies.

The “boom” of mobile banking services happened in Russia in the 2010s: one of the first was Tinkoff in 2011 and Rocketbank in 2013. Now all the largest and even many small Russian banks are developing their applications. And in the eyes of customers, the lack of convenient mobile banking is considered bad form.

Contactless payments can be considered one of the latest examples of the US advancing by Russian banks. According to them, the country significantly bypasses America and some parts of Europe. In Russia, banks immediately issued modern terminals to outlets already equipped with NFC contactless payment.

Percentage of stores accepting Apple Pay in different countries. 
Russia is among the leaders – at the level of the United Kingdom, and better than Spain, Canada and the USA.Photos from the presentation of Apple

At the same time , old terminals are still common in America , in which you need to carry out a card with a magnetic strip. In the United States, the transition to accepting payments on cards with a chip began only in 2015.

But even in this case, the catalyst for the changes was not the desire to improve the system, but the fact that the damage from credit card fraud outweighed the cost of replacing the terminals. By 2018, only 59% of the points were equipped with new terminals – the rest all also work only with magnetic tapes.

In recent years, the situation in the United States has begun to change in a positive direction. Banking services like Rocketbank began to appear there: for example, Varo Money and Zero, and in 2019, European startups Revolut and N26 should start in the country. However, the largest US banks have not switched to the mobile-first principle, they are introducing changes very slowly and cannot agree among themselves on contactless payments.

Apple Card will be the largest impetus for changes in the stagnant US banking market.

Against this background, the Americans were rightly excited about the release of the Apple Card – a card that you don’t have to go anywhere, which is tied to an iPhone and works wherever there is Apple Pay (according to Apple, 70% of US stores). The main advantage of the Apple service is that cashback will be returned daily and in real money, while many traditional banks accrue points and bonuses once a month.

At the same time, the company simultaneously stimulates the distribution of terminals with the support of its payment system and will be able to earntwice as much on transactions than it is now. During the presentation, special attention was paid to the fact that neither Goldman Sachs nor Apple will see the purchase data, which means they will not be able to sell them.

But the Apple Card has its drawbacks: for example, a high interest rate (from 13% to 24% per annum) and an increased cashback (3%) only for purchases at Apple. According to the totality of conditions, a card from a company is not much more profitable than offers from competitors: analysts believe that the Apple Card is unlikely to quickly become a market leader.

Apple Card, most likely, will not appear in Russia, but we will not lose anything

Goldman Sachs and the MasterCard payment system acted as partners in the Apple Card – it will be responsible for processing transactions. At the presentation of the service, they announced the launch only in the USA in the summer of 2019.

Later, representatives of Goldman Sachs confidently announced that over time they would consider international expansion. It is not clear which countries exactly are meant, but Russia is unlikely to be among them.

Apple really could release Card in different countries in partnership with other banks. But unlike Apple Pay, a card is no longer just a “layer” between a user’s bank account and a store, but a full-fledged payment tool.

In 2017, Apple already launched a financial product – the Pay Cash transfer service. For him, a virtual debit card was created at Wallet through which the transactions went. In Russia, the service did not work for a year and a half from the announcement, most likely due to local laws.

As in the case of Pay Cash, the launch of the Apple Card rests not only on Apple’s desire, but also on the requirements of regulators that differ in different countries. Particularly because of this, startups like Revolut and N26 are experiencing problems with international expansion, even despite the presence of partner banks.

When launching in Russia, a separate problem for the Apple Card could be customer ratings. Unlike the United States, where there is a developed credit rating system, many Russians never took loans and used only debit accounts.

Even despite the convenience of the Apple Card, many banks, with perhaps the exception of the daily cashback with real money, already have Russian banks. Support via chat, convenient statistics in the application and the release of a virtual card in a couple of clicks have long become an integral part of many domestic services.

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