Apple Card: New iPhone payment system starts rolling out to customers

Select users start receiving invitations

Jennifer Bailey, vice president of Apple Pay, speaks during an Apple product launch event at the Steve Jobs Theater at Apple Park on March 25, 2019 in Cupertino, California (Michael Short/Getty Images)

Apple has started rolling out its new payment card to a small set of users.

The card is a virtual payment system which sits in the iPhone and allows people to pay with their device. It is issued by Goldman Sachs but branded by Apple, and includes a range of tech features.

Despite living primarily in the phone, users can also request a shiny titanium card for payments, which is rolling out now too.

Apple announced the card in March, aiming to draw in iPhone owners by offering a card with 2 per cent cash back on purchases with the ApplePay service, no fees, an app to manage related finances, and a focus on data privacy.

For Goldman, the issuing bank, the card builds on a foray into its Marcus consumer banking brand, started in 2015.

Apple said a limited number of consumers who expressed interest in the card will start to receive sign-up invitations on Tuesday.

The card is designed to work with the iPhone, where users sign up for the card and can start using it immediately if approved via the Apple Wallet app and Apple Pay system.

The physical card has no visible number. Instead, the card's number is stored on a secure chip inside the iPhone, which generates virtual numbers for online or over-the-phone purchases requiring a number.

Apple has focused on privacy, saying that purchase information is stored on the user's iPhone and that it cannot see the information. Goldman will not be allowed to use data for marketing purposes, even for selling other Goldman products.

Gene Munster, managing partner with Loup Ventures and a longtime Apple watcher, said Apple Card adoption is likely to be low in the first year, but that Apple Card could generate about $1.4 billion of high-margin revenue by 2023, adding about 1.8% to Apple's overall earnings and complementing the much larger Apple Pay business for total payments revenue of $5.38 billion by 2023. Apple has roughly 50 million U.S. Apple Pay users now.

But at Apple's size - $265.6 billion in sales for fiscal 2018 - the revenue matters less than the effect on keeping Apple customers tied to its brand, analysts said, said Ben Bajarin, an analyst at Creative Strategies.

"If it works, it's one more thing that causes you to stay deeply loyal and entrenched in the Apple ecosystem, even if something better comes along," he said.

Additional reporting by Reuters