"WEBVTTKind: captionsLanguage: enback in 2014 Apple CEO Tim Cook went on stage and began to bash the physical credit card as this inconvenience and insecure way of making payments of course this is right before they went on to propose their solution to that problem in Apple pay which is supposed to make payments way more convenience and way more secure than ever but fast-forward five years later and the very same company and the same CEO introduces the Apple card a shiny titanium and well-designed credit card that is still very physical now to be fair the physical card is technically optional you can have it only on your iPhone using Apple pay but I think a lot of the appeal for the Apple card when you stack it up against all the other credit cards out there is the flashy titanium right and ultimately I think it plays a big part of Apple's overall strategy with the Apple card which almost seems like a step backwards for Apple considering their long-term vision of replacing the wallet which begs the question of why right like why would Apple introduced the Apple card at first glance it's easy to say that well Apple is increasingly moving towards becoming a services business iPhone sales have been on the decline for a number of quarters and it makes sense for Apple to diversify its revenue stream by having more and more services to offer but to think about that argument that doesn't necessarily sit well with me is the Apple card is very different from your traditional credit card in that it actually nudges you to pay less interest instead of more which is opposite to the revenue model of a credit card there's no late payments there's no annual fees and even if you are late on a payments you're APR your interest rate doesn't skyrocket like the way it does with most other credit cards so while Apple will undoubtedly make some revenue from these credit cards with the interest that they do charge when you consider that they're also splitting their revenue with the issuing Bank in goldman sachs it might still generate a significant amount of revenue but probably a relative drop in the bucket compared to the apple cash machine so then what's the real reason that Apple is going with the Apple card which seems to be the opposite of their stated long-term vision of replacing the wallets the answer really comes down to that same 2014 press conference at Apple held in Apple pay like Apple does want to replace your wallets but what they've learned is Apple pay alone isn't enough to do the job some surveys suggest that even today less than one-third of iPhone users have even tried Apple pay let alone use Apple pay on a daily basis so clearly like the tech itself wasn't enough to change consumer behavior when you can't change consumer behavior by offering a more convenient option the next option is to incentivize them and that's exactly what the apple cart is doing so when you use the physical Apple card you get one percent cash back on all your purchases this is no different from a lot of the other credit cards out there and the effect for Apple is every time you use your physical credit card not only do you associate Apple with every transaction but it also acts as a visual cue reminding you to use Apple pay either on your watch or on your iPhone why would you want to do that well this same Apple card credit card gives you two x two points back when you use Apple pay instead of the card itself so 1% cash back when you use the card 2% cash back when you use Apple pay on your iPhone or Apple watch which inevitably is gonna lead people to start using Apple pay way more often and they're financially incentivized to do so not only will it change the behavior of the people who have the Apple card but it might also change the behavior of those merchants who still don't accept Apple pay of which there's still plenty how well simple example let's say there's a gas station that you frequent and it's where you fill up your car all the time if you get the Apple card and you know that you can get 2% cash back when you use Apple pay and then you find out that that gas station doesn't support Apple pay maybe you go across the street to the other gas station that does and if enough people start doing that in order to get 2x2 points back eventually that original gas station will start losing business and will almost be forced to invest in the tech to start accepting Apple pay in order to win that business back and what this will effectively do is create a better feedback loop with using Apple pay now more place they're gonna at Apple pay there's less friction right look right now there's a lot of friction with Apple pay where you're not sure for retailer except that you have to ask the question sometimes it's easier like while they're ringing you up you ply your credit card in by the time they're done you stick it in the little chip reader and you're done versus you have to wait for them to finish ringing you up and then asking them if they accept Apple pay only to get rejected like that doesn't feel good nobody likes to be told no if you're incentivized though to ask right I know if I know that I'm gonna get double the money back if I just ask a simple question I'm more likely to do that I'm more likely to remember which retailers or restaurants or businesses actually accept a buffet and I'm more likely to start avoiding the ones that don't so merchants are going to be pushed to adopt Apple pay I think consumers are gonna start using a bit more I think the feedback loop is gonna get stronger and you know speaking of feedback loop one thing that Apple is doing that's like really smart with the Apple card is not only are they incentivizing you to use Apple pay but they're also giving you that cash back on a daily basis now most credit card companies regardless of if they give you 1 or 1.5 or 2% cash back you have to wait a while I get to wait until your next statement in order to be able to get that cash back with the Apple card you're getting it literally the next day so if you go out and you spend like 250 bucks on something and you use Apple pay you get 2% cash back on that that's $5 meaning the very next day you can literally go to your coffee shop use the Apple pay again and have a free cup of coffee on Apple now that's a very short feedback loop and when you look at addiction or changing behavior the shorter the feedback loop is the more addictive that behavior becomes so I think the apple cart for the people who do sign up you have to have an iPhone in order to sign up but for the people who do ultimately I think it's really gonna start changing things for Apple because again less than one third people who have iPhones have you even tried Apple pay and even less report that they used Apple pay on their last transaction I think the people who get the Apple card are gonna start using Apple pay on a daily basis ultimately that's gonna start changing the businesses that accept Apple pay and even the people who don't have the Apple card will start seeing that hey everywhere accepts Apple pay and now it removes the friction of you even having to ask I think it's a really really smart move I got at first you know I thought like what does that we'll doing but after looking at it it's that one step back in tech for Apple to be able to take Ford is the Trojan horse for the wallet it's a nice shiny thing it's a nice gift to the wallet that will ultimately end up killing it because one Apple wants to lock you into buying iPhones right Apple pay only works on Apple devices and two apples already taken over one of your pockets they want to take over the other one and the only way to do that is to get rid of the wallet so that way they can slip in their air pods or their upcoming AR headset but what do you guys think like are you guys interested in the Apple card does the the status symbol that gives you interest to you or does the 2x rewards interest you or are you thinking no way I don't want to get any more locked into the ecosystem than I already am let me know down below in the comments anyways that is it for me in this video thank you guys for watching and as always I'll see you in the very next episodeback in 2014 Apple CEO Tim Cook went on stage and began to bash the physical credit card as this inconvenience and insecure way of making payments of course this is right before they went on to propose their solution to that problem in Apple pay which is supposed to make payments way more convenience and way more secure than ever but fast-forward five years later and the very same company and the same CEO introduces the Apple card a shiny titanium and well-designed credit card that is still very physical now to be fair the physical card is technically optional you can have it only on your iPhone using Apple pay but I think a lot of the appeal for the Apple card when you stack it up against all the other credit cards out there is the flashy titanium right and ultimately I think it plays a big part of Apple's overall strategy with the Apple card which almost seems like a step backwards for Apple considering their long-term vision of replacing the wallet which begs the question of why right like why would Apple introduced the Apple card at first glance it's easy to say that well Apple is increasingly moving towards becoming a services business iPhone sales have been on the decline for a number of quarters and it makes sense for Apple to diversify its revenue stream by having more and more services to offer but to think about that argument that doesn't necessarily sit well with me is the Apple card is very different from your traditional credit card in that it actually nudges you to pay less interest instead of more which is opposite to the revenue model of a credit card there's no late payments there's no annual fees and even if you are late on a payments you're APR your interest rate doesn't skyrocket like the way it does with most other credit cards so while Apple will undoubtedly make some revenue from these credit cards with the interest that they do charge when you consider that they're also splitting their revenue with the issuing Bank in goldman sachs it might still generate a significant amount of revenue but probably a relative drop in the bucket compared to the apple cash machine so then what's the real reason that Apple is going with the Apple card which seems to be the opposite of their stated long-term vision of replacing the wallets the answer really comes down to that same 2014 press conference at Apple held in Apple pay like Apple does want to replace your wallets but what they've learned is Apple pay alone isn't enough to do the job some surveys suggest that even today less than one-third of iPhone users have even tried Apple pay let alone use Apple pay on a daily basis so clearly like the tech itself wasn't enough to change consumer behavior when you can't change consumer behavior by offering a more convenient option the next option is to incentivize them and that's exactly what the apple cart is doing so when you use the physical Apple card you get one percent cash back on all your purchases this is no different from a lot of the other credit cards out there and the effect for Apple is every time you use your physical credit card not only do you associate Apple with every transaction but it also acts as a visual cue reminding you to use Apple pay either on your watch or on your iPhone why would you want to do that well this same Apple card credit card gives you two x two points back when you use Apple pay instead of the card itself so 1% cash back when you use the card 2% cash back when you use Apple pay on your iPhone or Apple watch which inevitably is gonna lead people to start using Apple pay way more often and they're financially incentivized to do so not only will it change the behavior of the people who have the Apple card but it might also change the behavior of those merchants who still don't accept Apple pay of which there's still plenty how well simple example let's say there's a gas station that you frequent and it's where you fill up your car all the time if you get the Apple card and you know that you can get 2% cash back when you use Apple pay and then you find out that that gas station doesn't support Apple pay maybe you go across the street to the other gas station that does and if enough people start doing that in order to get 2x2 points back eventually that original gas station will start losing business and will almost be forced to invest in the tech to start accepting Apple pay in order to win that business back and what this will effectively do is create a better feedback loop with using Apple pay now more place they're gonna at Apple pay there's less friction right look right now there's a lot of friction with Apple pay where you're not sure for retailer except that you have to ask the question sometimes it's easier like while they're ringing you up you ply your credit card in by the time they're done you stick it in the little chip reader and you're done versus you have to wait for them to finish ringing you up and then asking them if they accept Apple pay only to get rejected like that doesn't feel good nobody likes to be told no if you're incentivized though to ask right I know if I know that I'm gonna get double the money back if I just ask a simple question I'm more likely to do that I'm more likely to remember which retailers or restaurants or businesses actually accept a buffet and I'm more likely to start avoiding the ones that don't so merchants are going to be pushed to adopt Apple pay I think consumers are gonna start using a bit more I think the feedback loop is gonna get stronger and you know speaking of feedback loop one thing that Apple is doing that's like really smart with the Apple card is not only are they incentivizing you to use Apple pay but they're also giving you that cash back on a daily basis now most credit card companies regardless of if they give you 1 or 1.5 or 2% cash back you have to wait a while I get to wait until your next statement in order to be able to get that cash back with the Apple card you're getting it literally the next day so if you go out and you spend like 250 bucks on something and you use Apple pay you get 2% cash back on that that's $5 meaning the very next day you can literally go to your coffee shop use the Apple pay again and have a free cup of coffee on Apple now that's a very short feedback loop and when you look at addiction or changing behavior the shorter the feedback loop is the more addictive that behavior becomes so I think the apple cart for the people who do sign up you have to have an iPhone in order to sign up but for the people who do ultimately I think it's really gonna start changing things for Apple because again less than one third people who have iPhones have you even tried Apple pay and even less report that they used Apple pay on their last transaction I think the people who get the Apple card are gonna start using Apple pay on a daily basis ultimately that's gonna start changing the businesses that accept Apple pay and even the people who don't have the Apple card will start seeing that hey everywhere accepts Apple pay and now it removes the friction of you even having to ask I think it's a really really smart move I got at first you know I thought like what does that we'll doing but after looking at it it's that one step back in tech for Apple to be able to take Ford is the Trojan horse for the wallet it's a nice shiny thing it's a nice gift to the wallet that will ultimately end up killing it because one Apple wants to lock you into buying iPhones right Apple pay only works on Apple devices and two apples already taken over one of your pockets they want to take over the other one and the only way to do that is to get rid of the wallet so that way they can slip in their air pods or their upcoming AR headset but what do you guys think like are you guys interested in the Apple card does the the status symbol that gives you interest to you or does the 2x rewards interest you or are you thinking no way I don't want to get any more locked into the ecosystem than I already am let me know down below in the comments anyways that is it for me in this video thank you guys for watching and as always I'll see you in the very next episode\n"