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Apple’s new credit card means the tech giant is now battling the same banks that built Apple Pay

For FAANG companies, everyone is a frenemy.

A hand extends an iPhone toward a contactless credit card reader.
Apple introduced Apple Card on Monday, March 25, at an event in Cupertino, Calif.
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

The new Apple credit card the company announced on Monday does more than give its users cash back and cool iPhone features. It also pits Apple against the same big banks it needed to get its Apple Pay service off the ground more than four years ago.

The Apple Card, backed by Goldman Sachs, carries no fees and 2 percent “daily” cash back when someone uses it to make a purchase via Apple Pay’s payment service. Apple Pay is an increasingly popular payment method in apps and on websites, and can also be used for tap-to-pay phone payments in brick-and-mortar stores.

That means Apple is now going to be competing with banks like Chase and Citi to get iPhone users to choose the Apple Card as the default card for Apple Pay payments.

“They relied on a whole ecosystem of banks to build out Apple Pay to get it to where it is today, and now they’re making a conscious decision to compete directly with those partners,” said Jordan McKee, research director at 451 Research.

Apple’s move is just the latest example of the biggest players in the tech industry leveraging their dominance among modern consumers for cooperation from titans of traditional industries. Often, that cooperation turns into competition.

The Apple Card will also allow iPhone users to track their weekly and monthly spending across shopping categories. At least for now, those features don’t appear to be open to iPhone users using another bank’s card.

“They’re not just competing in Apple Pay, but they are [also] opening up features only for the Apple Card that other banks can’t leverage,” McKee said.

Still, it’s tough to want to shed tears for America’s big banks. They have a history of making big money by selling your data so marketers have a new contact to hawk their services or wares. They’ve also collectively made fortunes by charging sometimes-usurious penalty interest rates and other late fees. It seems, at least initially, as though Apple is taking a shot directly at the industry by prioritizing privacy with no data sharing or selling, as well as biometric authentication. The card also carries no fees and no penalty interest rates.

For years, Apple downplayed the idea that it would ever compete with the banks. After all, Apple need those credit cards so consumers could utilize Apple Pay. Now, Apple is establishing itself as a competitor in financial services. And it feels like just the beginning.

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