• Milos Dunjic

Is Apple Card Going To Be Monzo Killer?

Updated: Aug 26, 2019

Today apparently was a big news day in the world of payments. Apparently, yet another MasterCard branded credit card was announced to be launched soon ... this one is fancy, in titanium, 'completely' digital (oh wait, of course, it is also backed by unavoidable physical form factor 😉).

Then as my day went, I caught this intriguing thought on social media feed and it triggered me to provide a view about whether Apple Card is indeed going to become killer of Monzo's Unique Selling Proposition (USP).

Apple Card

Apple site states that "Apple Card is credit card that's 'built into' the Apple Wallet app on your iPhone, offering customers a familiar experience of Apple Pay and the ability to manage their card right on iPhone". Hm, ok. First, sorry Android users (hopefully Apple will allow you to provision this card into your Google Pay wallet). Second, this isn't particularly novel concept, as many card issuing banks are already able to push digital versions of their instantly issued credit cards (before customer receives plastic in the mail) into the exact same Apple Pay wallet. Instant card issuing capability has been in place for several years now.

So far, honestly not a big deal really.

As typical credit card, Apple Card also comes with standard interest rate charges on all cash advances and revolving credit (i.e. if you do not pay your outstanding credit card balance in full at the end of the cycle). This puppy's annual interest charges will vary in range from 13.24% to 24.24%, based on YOUR creditworthiness. Will be interesting to learn about how advanced is going to be Apple's the adjudication methodology, for determining your creditworthiness ... because, guess what ... that will also determine THEIR future profitability.

As its main reward, this card gives you (2% to 3%) cash-back on selected purchases. But unlike most other traditional cash-back reward programs, where the issuer gives you earned cash back as a lump sum once a year, Apple promises to deposit your daily earned cash back into your Apple Cash digital wallet (apparently only if you have Apple's version of PayPal-like wallet set-up). Nice touch, but limited to Apple Cash ecosystem.

Apple Card uses Apple Maps to pinpoint where you bought something. Instead of cryptic merchant codes on your digital transaction history, Apple will provide full store name, along with its location on a map. Helpful but not novel either. MasterCard and Visa offer APIs with that already for several years now.

Real card issuing FI and authorization processor is in fact Goldman Sachs ... so Apple is mainly using its brand and large cash reserves, while the REAL FI is doing the heavy lifting in the background. As a team, they promise that collected transaction and private data behind credit card account will not be shared with 3rd parties (at least for now).

The Apple Wallet app offers some nice features mainly around basic categorization of your spending. You can see how much you’re spending, directly in the Wallet app, summarized by week or by month. FYI Apple PR people ... people also do not need to log into our mobile banking apps anymore, as long as they enable them for Touch ID 😉.

Monzo Card

On the other hand, Monzo is a fully fledged, challenger (mobile only) digital bank that offers customers current account (i.e. debit account) with accompanying Monzo MasterCard branded DEBIT card (for spending your own money), not CREDIT card (for spending someone else's money).

As such, Monzo gives you earned interest on account balances and everything else that comes with your typical bank debit account, plus some more. First, you can withdraw money out of ATM normally, you can send instant bank transfers, have optional overdraft, card controls, all without being charged any transaction fees. Monzo also offers their own set of cool budgeting tools and views, built right into their mobile app, where you can set spending limits per category and get instant spending notifications.

As a simple comparison, don't even think about using your Apple Card to withdraw cash ... as you will instantly be hit with charged annual interest rate on the amount of that cash advance withdrawal.


So, is Apple Card really Monzo's USP killer? In my opinion, not necessarily ... in fact, I believe these cards' customer props should not even be compared. As it should be clear by now, these two are fundamentally different card products. Don't be confused by similar budgeting gimmicks on the surface.

Monzo Card is used to spend (and directly manage spending, by setting and controlling categorized limits on) YOUR OWN money (from underlying Monzo debit / current bank account), while Apple Card is used to spend (and keep track of owed debt by category of) SOMEONE ELSE's money (from the underlying unsecured lending / credit account). Apple also can help you plan and get out of credit card debt, if you ever end up in such situation.

So my main conclusion is that, since Apple Card doesn't directly compete with Monzo offering, it should not be seen as direct threat to Monzo's USP, although, on the surface, it offers similar UX 'budgeting' features.

In fact, on the contrary, I believe that these two cards can be (and probably should be) a perfect complementary pair of cool, modern digital cards, for up and coming digital generation.

Both 'fit' into Apple Pay wallet and can be used selectively, depending on the actual spending situation.

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