By Liz Hoffman and Peter Rudegeair 

Apple Inc. launched its highly anticipated credit card Monday, positioning it as a more user-friendly and secure alternative in a crowded market.

The new credit card, called the Apple Card and launched in collaboration with Goldman Sachs Group Inc., will charge no fees, pay daily cash rewards and sync with consumers' iPhones to analyze their spending.

Apple Chief Executive Tim Cook announced the new card, which will be released this summer, at an event detailing the launch of a range of services, including news subscription and TV apps.

As reported earlier this year by The Wall Street Journal, the card will run over Mastercard's credit-card network and give users 2% cash back when they pay using their iPhones. In-store swipes will earn 1%, while purchases of Apple services and products will earn 3%, Apple said Monday.

Budgeting features will show users how much they spend and where and calculate how different repayment options will determine how much interest they wind up paying.

Goldman aims to convert some of Apple's fans into customers of its new consumer bank, Marcus. Speaking later at the event, Oprah Winfrey hit on Apple's reach: "They're in a billion pockets."

Apple's payments chief, Jennifer Bailey, said Goldman's newcomer status allowed it to build custom features that other banks would have balked at. Within minutes, Apple was marketing its card on Twitter and as "designed by Apple, not a bank." Goldman's logo will appear on the back of the card.

Actors Aaron Paul and Octavia Spencer were shown cheering the card's launch during a live stream of Apple's star-studded presentation. Also in attendance in Cupertino, Calif., were Goldman's CEO, David Solomon, and chief financial officer, Stephen Scherr, along with members of the team building Goldman's consumer bank, Marcus.

The card's rewards are less generous than many already on the market. Citigroup Inc. and Fidelity Investments both offer 2% cash back, and U.S. Bancorp has a card that gives extra rewards for Apple Pay transactions.

Rather, Apple is betting heavily on the loyalty of iPhone users and the company's reputation for privacy and security. Breakdowns of where and when users spend their money will live on the iPhone, not Apple's servers, and Goldman has agreed not to sell or share purchase data with advertisers, Apple said.

"Frankly, I'm underwhelmed," said Ted Rossman, an analyst at CreditCards.com. "People will sign up for it, but that will be mostly because they love Apple, not because this card is better than anything that already exists."

Ms. Bailey said she expects the card to carry the lowest rates in the industry. Information posted on Apple's website said annual rates would range from 13.2% to 24.4%, depending on how creditworthy a consumer is. Currently, the average U.S. credit card charges about 18% a year, according to CreditCards.com.

The new card builds on technology pioneered by a startup that Goldman acquired in 2017 that generates one-time, virtual card numbers for each transaction. The number also doesn't appear on the physical card, which design-obsessed Apple said is made of titanium and is laser-etched.

"If I'm all the other credit companies, I'd be sweating bullets right now," said Bob O'Donnell, president at Technalysis Research, a market research firm. "Apple's good at finding pain points for consumers and simplifying."

Write to Liz Hoffman at liz.hoffman@wsj.com and Peter Rudegeair at Peter.Rudegeair@wsj.com

 

(END) Dow Jones Newswires

March 25, 2019 16:47 ET (20:47 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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