
How Apple Card Works - jmsflknr
https://techcrunch.com/2019/03/28/how-apple-card-works/
======
kevindong
What's TechCrunch's source on all of this info? Or is it just pure
speculation/reasoning?

\---

I was talking with a friend a few days ago about how the physical Apple Card
would work in reality. During that conversion, I came up with the idea that
maybe the physical card contains a custom chip on it that an iPhone can
communicate with via NFC. That NFC chip would be able to rewrite the card info
(i.e. card number, exp. date, and CVV) at will to the physical chip on the
card (the one that talks to the actual payment terminals) and that's how Apple
is going to issue cards that never technically expire. Perhaps they'll do
something similar with the mag stripe (their promo videos pretty clearly show
that the physical card does indeed have a mag stripe)?

~~~
ztjio
The chip on the card is an entire computer running a Java program every time
it's activated by the terminal. What it communicates via that terminal can
vary, the same way the NFC tap-to-pay terminals can vary. There's no need for
it to carry a conventional card number or expiration or anything.

~~~
jdillaaa
Why on earth would it run java?

~~~
sebazzz
It is nothing like the real Java. Almost no regular data type is supported and
there are severe limitations. [1]

You should view it as using a safe language instead of something like C. If
Rust had been invented 20 years ago, it might have been Rust instead.

[1]
[https://en.wikipedia.org/wiki/Java_Card](https://en.wikipedia.org/wiki/Java_Card)

~~~
jdillaaa
fascinating. thanks!

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morpheuskafka
Why couldn't they have dropped the magstripe completely and forced the card to
use online chip mode only and then declined all transactions unless
temporarily unlocked within app? Would be a lot simpler than pairing card to
phone.

~~~
untog
Presumably because there are still a lot of transactions out there requiring a
magstrip.

~~~
reaperducer
You are correct. Lots of places still don't take chips. Pei Wei for one.

At Lowes last month I noticed that chip is only accepted for credit
transactions; debit has to be swiped. Or the other way around.

~~~
ams6110
In the USA, pay at the pump transactions for fuel are still 100% mag strip as
far as I've seen. The POS terminal inside can typically do chip transactions,
but not the pumps.

~~~
mathgeek
I’ve used Apple Pay at a few Sheetz stations along I-95, but the vast majority
of stations are still swipe-only.

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elektor
This is a nice card for beginners to credit cards but I don't anticipate a lot
of uptake by consumers familiar with the Uber Barclays or Chase 2% cards.

~~~
oddity
Can you elaborate? I’m not familiar with these. What are the pros/cons?

As for the Apple Card, I’ve been fairly dismissive of most of Apple’s recent
products, but this is the most interested I’ve been in an Apple product since
the iPhone. It feels like a similar situation: a “device” that seems simpler
to use than existing offerings leveraged off of a partnership with a company
that has nothing to lose by playing along with Apple’s game. It might not be
the best card offering in terms of features, but it seems like a solid choice
for the masses.

~~~
kevindong
Apple is acting as though their rewards is the most generous reward system
ever, period. In reality, it is not even close. For instance, you can
trivially get 2% cashback on all purchases (regardless of whether you're using
Apple Pay or not) without annual fees:

\- Citi Double Cash: unlimited 2% back on everything; regardless of payment
method; no annual fee

\- Fidelity Rewards: unlimited 2% back on everything; regardless of payment
method; no annual fee

\---

2% is the minimum you should earn on any credit card purchase. There are a
bunch of generous rewards cards that offer special cashback rates on certain
categories. For instance, the US Bank Cash+ card [0] lets you pick two
categories to get 5% cashback on, albeit you're limited to $2,000 in spending
per quarter. After that $2,000, you only accrue 1% back. One of the categories
is 'Electronics Stores', which includes Apple. In other words, you can get 5%
back on Apple purchases (on up to $2,000/quarter in purchases) while the Apple
Card offers unlimited 3% back on Apple purchases. There is no annual fee for
this card.

The Uber Visa card [1] gets you 4% back on dining and 3% back on
hotels/flights with no annual fee.

The Chase Freedom and Discover it cards both have rotating 5% categories
(subject to a $1,500 per quarter maximum spend) without annual fees. Meaning,
you get 5% back on specific categories on each card which change every
quarter. In 2018, the Chase Freedom card had gas stations,
internet/cable/phone, Google/Apple Pay, grocery stores, PayPal, gas stations,
Lyft, Walgreens, department stores, and wholesale clubs as some of their
rotating categories [2]. Also in 2018, Discover had gas stations, wholesale
clubs, grocery stores, restaurants, and Amazon as their categories [3].

Admittedly, I believe most of the banks named above charge the "normal" fees
that Apple has stated they will not be charging (i.e. penalty APR rates, late
fees, etc.). But in reality, responsible users of credit cards were never
going to pay those kinds of fees anyway.

[0]:
[https://cashplus.usbank.com/merchants/index](https://cashplus.usbank.com/merchants/index)

[1]: [https://www.uber.com/c/uber-credit-card/](https://www.uber.com/c/uber-
credit-card/)

[2]: [https://thetravelsisters.com/chase-freedom-
categories-2018-c...](https://thetravelsisters.com/chase-freedom-
categories-2018-calendar/)

[3]: [https://awardwallet.com/blog/discover-5-categories-
calendar-...](https://awardwallet.com/blog/discover-5-categories-
calendar-2018/)

~~~
reaperducer
_Apple is acting as though their rewards is the most generous reward system
ever, period_

Is it? I don't think Apple is pretending to be the most generous. I think it's
trying to be the easiest/most friendly.

There are a lot of ways the Apple card is better than those you list,
especially when it comes to fees. But your post is too long for me to bother
going through it.

I picked your Uber example randomly.

4% back is great on dining. But it's only on dining. 3% on travel matches
Apple. The rest of Uber is 2%, except for some exclusions, which is less than
Apple.

Buy music and videos online? With Uber you're capped at $50 cashback per year.
And you only get that after you spend $5,000 within 12 months. And then the
clock resets.

Too many games. Apple's whole point is to simplify.

Personally, I don't even like the whole cashback thing, but I accept that
other people do. I'd rather they just lower my interest rate instead.

Uber's rate is 17.24-25.99%. We'll have to see what Apple comes up with.

~~~
lotsofpulp
If one is borrowing money at credit card level interest rates, the last thing
they should be worry about is rewards, and the first thing is figuring out how
to fix their cash flow so that they’re not paying credit card level interest
rates.

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philliphaydon
A bit off topic, and I may be (most likely) wrong... but isn't Apple Card a
good way for apple to dodge tax in some countries? Like if I'm in Australia
and I pay using Apple Card then pay my apple bill, apple gets 100% of the bill
paid with no sale so the money is in the country of their choosing paying the
minimal amount of tax.

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confounded
> _Using Apple Card on Android is pointless... you could continue using your
> physical card... but without the majority of the cash back or security
> benefits why would you?_

I’m mainly interested in the card for the privacy benefits, but would love to
get rid of my iPhone (and wouldn’t want to use a card dependent on carrying
one).

Does anyone familiar enough with transactions know if the physical card would
still be generating virtual numbers for each transaction if you’re not
carrying an iPhone?

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zxcvbn4038
I think the no-fees is partly a reflection of the reality of what it costs a
financier when you are late with a payment and partly a means of standing out
in a field where everyone else is lining up to kick you when you are down. I
use the “Don’t Fuck With Paste” browser extension on CapitalOne’s sites more
then anyone else’s - why don’t they want me to cut and paste into their web
forms? Because the small percentage of typeos that occur due to manual data
entry translate into millions in fee income - and of course it’s your fault
you got fined because it’s your mistake.

Probably the worst industry for this is car rentals - I have often wished
Amazon or some disruptive entity would get into car rentals. The entire
industry exists to just to shake you down when your at your most vulnerable -
far from home, unfamiliar territory, limited options. Is there any reason why
they can’t accept an alternate credit card from the one that secured a
reservation? No. Is there any reason the slightest change to a reservation
requires the previous reservation to be completely destroyed and renogiated at
a new price? No. Is there any reason that cash can not be accepted? No. I live
in a state that forces the rental car companies to accept cash and they do
just fine.

~~~
mgkimsal
> Is there any reason why they can’t accept an alternate credit card from the
> one that secured a reservation?

I did just that 3 weeks ago. Someone made a reservation for me, I used a
different card to pick up the car.

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ztjio
I'll be honest, I want this because it's a cool looking metal card. I already
use Apple Pay for the majority of my regular in-person spending, and don't
carry balances on (normal) credit cards so, it would just be a bump in my
available credit and a cool widget fitting right in with my minimalist wallet.
It would be a perfect white balance for my black Tesla key card.

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broknbottle
I can't lie, I was thinking of switching to the Apple card when it's released.
Unfortunately, it's a mastercard :( so no costco gas or shopping and I only
carry one credit card in my wallet..

~~~
millstone
Why not just use the digital form via the Wallet app?

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frosted-flakes
What if he/she does not have an Apple phone?

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CrowFly
I don't get the "no late fees" feature. I suppose they'll still make plenty of
money with the interest charges, and they'll probably freeze the card for new
charges at some point.

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labster
The post title gave me the slightest pang of hope that HyperCard was revived,
until I remembered the credit card. This is cool too, but not as much as I
hoped.

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keyle
I'm still floored when I read those interest rates. You guys got a Visa Debit?
It's a visa, that uses the money you have... Clever isn't it?

When will people understand that buying something now without the money is not
freedom? It's not, it's shackles.

~~~
peteretep
For all your moralizing, you're suggesting people forgo the sizeable benefits
of using a credit card for day-to-day purchases because some people are
foolish enough to use it as a long-term loan?

> When will people understand that buying something now without the money is
> not freedom

I would imagine the vast majority of people worldwide who have a mortgage are
happy with the end-result of that leverage.

~~~
keyle
No they're not. No one is happy with a mortgage. The very simple fact that
mortages exist is the reason why housing prices have multiplied over the
years.

~~~
toomuchtodo
I'm happy with my mortgage(s); they allow me control of real estate it
would've otherwise would've taken me 10-30 years to obtain.

Cheap capital can of course create asset bubbles, but nevertheless, debt is
one of the most useful tools you can use for wealth creation, innovation, and
economic growth.

