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Well guys i am back from vacation i’m happy to be back i was in san francisco and while i was actually in the area apple held a big event they showed off a bunch of different products new products services things like that and something really caught a lot of people’s attention which was an apple credit card and today i want to talk about how apple is actually going
To make money from this credit cards i’m getting a lot of messages from people eh why would apple spend all this time pro mowing this apple credit card why would they have it on the front page of their website why would they be showing this off like it doesn’t seem like apple’s gonna make any money from it people are very very confused and sometimes you got to look
A lot deeper than the surface guys to find answers on why company would would make a move like this because we know all businesses their goal is obviously make money right so there’s got to be an angle for apple to make money in this situation they wouldn’t just do something to do something there’s got to be an angle there’s got to be something they think they can
Do better to hopefully help them make a lot more money and i want to explain that into today’s video ok so if you have not seen the apple credit card basically it’s a pretty cool card in the sense it doesn’t even have numbers or anything on it so it’s pretty revolutionary in that respect most credit cards and debit cards out there they all show all the numbers and
Things like that and if anybody ever actually stole your credit card or debit card they could just you know type it in online buy anything from amazon or things like that they got the cvv on there they got the credit card numbers the month the date everything they got everything they pretty much need ok now apple as far as how apple is branding this card they say
This is the apple card a new kind of credit card created by apple not a bank so obviously apple is branding this as this card or something special we created this it’s gonna be way better for you than what the banks have created and things like that ok now bank of america’s response to this they took some shots coming back bank of america tech chief says there’s
Nothing new about the apple card the quote was my reaction when i saw the announcement was first competitively all of the features that are in the card we offer today that’s what the chief technology officer cathy bessant said that’s over at a bank of america essentially okay so if bank of america kind of thinks that way i’m assuming a lot of the better big banks
Wells fargo and jp morgan chase is some of those guys they probably think very similarly as well all there’s kind of nut new there nothing that’s special or something like that okay now apple they’re saying apple card completely rethinks everything about the credit card it represents all the things apple stands for like simplicity transparency and privacy it
Builds on the incredible ease and security that millions of people love about apple pay it’s the first card that actually encourages you to pay less interest you can buy things effortlessly with just your iphone or use the apple design titanium card anywhere in the world there’s a picture of the titanium card there pretty cool looking card in my personal opinion
Like i said no numbers anywhere on the card i guess it just shows you’re basically your first name your last names got the apple symbol there and it’s got the chip there so now if we take a look at this here and the next kind of slides i’ll show you right you’re gonna see that basically the apple card can keep track of with you basically your balance what you owe
Once you have available left you know when payments are coming to in a very easy to keep track of manner why because it’s all available on your iphone in the wallet app now you can sign up for the card in no time and start using it right away with apple pay keep that in mind okay that’s gonna be important to come back to later you can use it right away with apple
Pay for every purchase you make you get daily cash and it really is cash so you can spend it however you want right from the iphone have a question just text it’s that simple and if you look here it is pretty cool because it shows you kind of like your expenses all you spent this much on entertainment you spend this much on food and drinks you spend this much on
Shopping and it keeps a track of everything and it very easy to keep track of manner then show you different colors and things like that how much you spend per day your total spending budget everything like that daily cash no points no gimmicks no fees not even the hidden fees okay we want to make it easier to pay down your balance not harder so apple car doesn’t
Have any fees no annual cash advance over the limit or late fees no fees really and it is our goal with apple card to provide interest rates that are among the lowest in the industry and so you hear all that and you’re like okay that’s great that sounds pretty cool okay you’re obviously very easy to keep track of all your expenses now there are different apps out
There that you can keep track of your expenses okay many big companies have different apps that you can keep track of your expenses and it might even line-item it you know with entertainment expenses or food and drink expenses but there are usually separate apps it’s not you know it’s usually something you have to download or look for and once again not everybody
Looks for these type of things the fact that you could get this card and you can basically just keep track of everything right there that obviously is a great benefit to you know a certain segment of the population which is a bit a big part of the population that just don’t you know don’t care about money as much or just don’t pay attention to it as much at least
They can you know start to care maybe a little bit more okay so that is certainly cool and no fees obviously the credit card companies charge a ton of different fees so that is good so it seems like a product that is very interesting to many many consumers out there but once again the question comes why is apple doing this how are they making money from this is it
You know a lot of people just like that’s not making sense they’re partnering with goldman sachs okay goldman sachs and mastercard essentially goldman sachs and mastercard are basically going to make all the direct money on this you know interest rates and things like that you know transaction fees a lot of that mastercard and goldman sachs are gonna make pretty
Much all that money okay apple won’t get much of that money at all if any of that money at all okay so the question is apple makes no money when did apple get in the charity business i last time i checked apple is probably the most profitable company in the history of the world why would apple often you know to start doing charity work that just doesn’t make sense
Let’s just let’s just start coming out with things that they help people but we don’t make any money off it okay and so there’s a there’s a few different angles how apple will actually make a lot of money off this okay the first is remember we talked about apple pay remember we talked about apple pay well it’s apple’s goal to be a half basically everybody that’s
Using an iphone or an apple watch or anything like that they want all of us individuals including myself with apple customers to use apple pay right now i don’t use apple pay at all actually i was transferring some money to a friend recently a paypal transaction he’s like why don’t you use apple pay i was like oh i never even thought of that it’s like yeah that’s
Way easier apple wants everybody to be using apple pay why is this well if you can get everybody that’s you know let’s say a billion people out there use iphones or something close to that and maybe it’s not a billion maybe it’s you know half a billion or something do you need all those people doing their transactions through the apple pay then you just made it a
Lot stickier for people to stay in the apple ecosystem and continue to buy new and new iphones so let’s just look at an example we chat as a service right so if we look at wechat for instance wechat is worth you know hundreds of billions of dollars and basically on wechat one of the big things about it is if people use that for transactions so in china in china
Everybody uses their their phone either their iphone or their galaxy device or their hawala way device or their xiaomi or whatever it is they use their phones to do all the financial transactions i’m not just talking about online orders i’m talking about if they go to a restaurant a physical you know location they bogo buy some fruit from the local fruit stand
Down the street they use their phone and basically boom it does a transaction right there ok wechat is one of the huge services and ali pay is the other and basically you know how china is doing it and how the chinese folks are doing it over there in china right now as far as doing transactions with their phone that is the situation we’re gonna have in all the
Developed world we just haven’t got there yet ok we’re not there in europe yet we’re not obviously there in the united states yet some people do you know transactions through their phones you know obviously you place an amazon order it’s not like you go to your local restaurant right now at least or at least 98% of restaurant and you’re like oh just scan my phone
And then you pay through there or something like that ok you don’t go to the local business and you just boom you pay with your phone ninety-eight percent of the population is not doing that a lot of folks still use cash okay nevermind depe you know people like me that use debit cards i for their transactions then you’ve got a huge population in united states and
Probably europe as well they still use cash for all their transactions ok my parents for instance they still use cash i don’t even use debit cards they use cash like to buy things and whatnot work as a society we’re gonna move toward the chinese way which is essentially use your phone to do all the transactions and if that is a huge possibility in the future then
Imagine what type of opportunity that is for apple ok in with in regards to apple pay let me explain now you guys first thing you got to understand about business is the greatest businesses don’t make the most money from things on an upfront basis they make it actually on the backend ok the best businesses the most well-run businesses they actually make money a
Lot of times from the back end and not the front end product so although apple probably won’t makes much money if any money all from the apple credit card it’s doing something it’s helping consumers keep track of things better maybe have a simpler way maybe have more security in regards to a credit card they feel that way right and so people are more likely to
Use that if people are more likely to use apple pay and you actually use an apple credit card then they’re more likely to stay in the iphone ecosystem if they stay in the iphone ecosystem that is the the holy grail for apple why because apple gets the majority of their revenue and profits from the iphone for every eye pretty much almost every iphone that sold apple
Make several hundred dollars a profit from that iphone okay we’re talking about revenue we’re talking about profit okay by the way that’s the same for samsung as well they make several hundred dollars for every samsung sold all right so iphone is the holy grail for apple it’s not just the holy grail in the sense of let’s make a few hundred dollars for selling each
You know a few hundred dollars profit for selling each one of those iphones but then the bigger thing is this okay then those people are much much more likely to get air pods all right we air pause does something that’s starting to take off i was in san francisco and i can tell you it seemed like almost everybody had air pods it was ridiculous okay you’re much
More likely to get an apple watch if you have an iphone okay my wife i got her an apple watch for christmas she absolutely loves that thing hey she loves her apple watch okay you’re much more likely to get that if you have an iphone you’re also much more likely to spend a bunch of money on services whether it be apple music whether it be buying movies you know
Spending money on on games or different things like that different apps you’re much more likely spend a bunch of money on the services if you have an iphone obviously if you don’t you’re gonna be spending money with google then okay because if you don’t have you know ios you don’t have an iphone then you have android and you’re gonna be spending money with google
Google is apple’s main competitor okay these guys are always fighting it out alright so it’s one of them’s getting your money it’s either gonna be google or it’s gonna be apple in the end apple wants to keep people in the iphone ecosystems they want people to be happy and have easy things to use okay that is all phenomenal for them all so people are going to be
More likely to buy ipads if they have an iphone they’re gonna be more likely to have mac’s all right they’re gonna be more likely to buy the apple home devices like the apple speaker the apple tv things like that obviously we know apples coming out with a video service so this is why something like this is huge for apple because if they can get you know a hundred
Million people are a few hundred million well using apple pay religiously it’s kind of like you know a leap a dozen china or wechat does right then also they win in a lot of the developed markets and it helps them fight off you know all the other competitors are in terms of the phone companies it helps a mainly fight off android which keep in mind apple’s main
Competitor is obviously google like you might think like apple’s main competitor is samsung or huawei or xiaomi those are you know competitors of apple but mainly at the end of the day the two guys that are fighting it out is really google and apple because google owns android and apple owns ios and you’re either on one of those those you know platforms essentially
Okay so this is a big competitive fight against google you might think oh it’s apple coming against the bank’s no you might think it’s apple coming against the other hardware phone manufacturers no it’s apple coming against google those are the two dogs that are in the big fight ok those are the guys that are battling out to you know see who basically you run all
Your electronic so you’re gonna be android and you’re gonna be ios and apple wants to do everything possible to keep its you know its users as happy as possible using services in the simplest way possible for them to understand and if that means they come out with something they brand it they spend all this time and attention apple credit card and even if they
Don’t make any money on that a dog you know on the front side it just helps so much in the back end because it could help people stay in the ecosystem if you get used to use an apple pay everywhere and you got apple watch and you got an iphone and all these different devices and you’re just used to using all that you’re much more likely to stay in the ecosystem
And that’s really how apple is gonna make a fortune off apple credit card if it is a success and once again we don’t know if this will be a success until at least a few months down the road if not a year to two years down the road okay it’s not something like you can tell initial demand you look like oh that’s gonna be a smashing success oh that’s gonna be a
Failure for instance air pods were super hated on when they came out people made fun of them they were like oh looks like you have little toothbrushes in the air or whatever like people made so much fun of air pods and now air pods are like the hottest electronics you can possibly get anybody like i ever like i said i was walking around san francisco and i was
Looking at people and i’m like like what at least one or two out of ten people had air pods in and that’s just crazy because that’s still you know a first generation device it just actually came out with the second generation now so i could all imagine in a generation or two how many folks will actually have air pause and at first that people were hating on that
Like crazy and how everybody wants it so it’s just funny how it works so we don’t know if this will be a big hit until at least a few months down the road if not a year or two and then we’ll see is this something that helped apple get over that hump where everybody’s starting to use apple pay or are they still trying to get there guys so you’ve got to think about
This is how great businesses make money man they don’t make so much money on the front side they make a lot of money on the back side this is a perfect example of that guys so that’s how the apple credit card is basically gonna make apple a fortune let me know what your guys thoughts are down there in the comment section thank you for watching and have a great day
Transcribed from video
How Apple Credit Card Really Makes Apple Money By Financial Education
