Data Dive

Data Dive, Spring Blooms Edition: Apple, Citi And Square

Data Dive: Apple Card, Citigroup And Square

April has arrived, and once we’ve sorted out the various pranks, we can all take a minute to appreciate that winter is over. Granted, depending on how far north one lives, it may still feel like winter, but as of this month, spring’s presence begins to be more strongly felt. The birds chirp, the temperature goes up and all kinds of colorful things start to bloom.

And while payments and commerce does have fewer chirping birds, it seems spring has sprung here as well – last week, we saw the start of all kinds of big blooms getting their start, especially at Apple, Citi and Square.

The Apple Card Arrives

When Apple Pay rolled out nearly half a decade ago, Tim Cook touted its ability to replace the plastic card. As of last week, Apple seems to have reconsidered that notion, rolling out a credit card all its own.

Launched in partnership with Goldman Sachs and Mastercard, the new card will allow users to sign up via Apple Pay, and upon acceptance see their card instantly provisioned into their Apple Wallet. Users will also receive a physical titanium card, though that card will not have numbers or an expiration date. The card will offer cash back rewards, tiered by spending type, paid instantly to the user’s “Daily Cash” account within Apple Wallet. Users get 3 percent cash back for purchases with Apple, 2 percent on purchases made with Apple Pay and 1 percent back on regular card purchases.

Additionally, the company has said there are no late fees, international fees or penalty interest rates.

Said CEO Tim Cook in an announcement heralding the card, “While we all need them, there are things about the credit card experience that could be so much better.”

What wasn’t announced along with the card – but was discovered in the days that followed – is that Apple will now only support credit card-based P2P payments using the Apple Card, and has added an instant transfer feature that lets users move money from Apple Pay Cash to a debit card for a 1 percent fee.

The card’s announcement was part of a parcel of updates to Apple’s Services line-up early last week. Apple also touted subscription options for cable, video gaming and news (on top of the music subscription service it already offers), though concrete details were somewhat slimmer than on the Apple Card.

Apple watchers and investors have been mixed on the latest slew of announcements. Most thought there might be potential, but that more detail was necessary to make that assessment.

The new card product also received some particularly tough reviews. Lifehacker more or less wrote it off as “an average rewards card.” Goldman Sachs research analysts were even tougher in their review of the credit card, which their bank is offering jointly with Apple. The problem, according to the analysts, is Apple Pay, which is still so limited in use that most users won’t really tap into much value with the card.

“Even though Apple Pay is becoming more available, we would still expect a large percentage of transactions to be done at the 1 percent return level (using the physical card), so we would expect the typical consumer to perceive the cash return rate to be okay but not great,” the analysts wrote.

Whether the card can trigger more mass-market Apple Pay adoption when it launches later this year remains to be seen.

Citi Launches New Payment Unit

Citigroup is hoping to make it easier for merchants to accept a wider variety of consumer payment types with the launch of a new payments unit. Merchants will have access to more consumer payment options to include credit cards, digital wallets and ACH transfers, among others.

Citi will work with Mastercard on the new offering, with the card network providing some of the back-end connections and processing for merchants.

“Our mission is to power frictionless payment acceptance with nimble technology. We want to extend our leadership beyond the B2B payment space by developing capabilities to enable institutions to collect from consumers in a globally consistent and seamless fashion,” said Naveed Sultan, global head of Citi’s treasury and trade solutions, in a prepared statement.

Citi further noted the expansion will offer institutions more visibility into the end-to-end transaction lifecycle, while allowing merchants to focus on business operations and growth.

“Every institution wants to focus their time on providing their customers with the best experience or the best product. Our trusted technology helps them do just that. We are excited to work with Citi and their leading transaction services business,” noted Mastercard’s Chief Product Officer Michael Miebach. “As they integrate Mastercard Payment Gateway Services, they’re making the whole process simpler for Citi’s institutional clients to accept payments from anywhere in the world and continue growing their businesses.”

The move is expected to allow Citigroup to better compete with companies such as PayPal and Stripe.

Square Embraces Invoicing

Invoicing is hard for SMBs, and Square would like to help businesses design, manage and send invoices from anywhere. Last week, they launched a new standalone Square Invoices app to do just that.

“The way we do business is changing; not everyone works from an office, and small businesses need the flexibility to handle core processes like invoicing on the go,” said Alyssa Henry, seller lead at Square. “With the Square Invoices app, small business owners are able to get paid remotely and access their funds quickly and securely.”

On average, an SMB tends to wait about 21 days from the time an invoice is sent to the time they actually receive their payment. It’s a lot of paper – and a lot of reliance on the USPS.

Square’s new product is designed to take all the paper out of the equation by removing the need for a physical invoice or physical checks.

“Whether they are getting paid for photographing a wedding or after taking on a new landscaping job, sellers can send invoices and get paid in just a few simple taps. In fact, more than 60 percent of invoices processed through Square are paid the same day,” the company said.

The app also helps business owners keep an eye on the financial health of their companies.

“Before, we would typically wait at least a couple of weeks to get paid, because we had to send invoice statements manually and wait to receive a check in the mail,” noted Beth Skony, who owns Launch Pad Media, a Chicago-based book editing and author services copyediting business. “It was difficult to keep track of what we were owed, determine what payments were overdue and ensure we were getting paid. Now, the process is streamlined, and more often than not, we’re getting payments the same day. Having access to our funds when we need them most has been a game-changer for our business.”

The Square Invoices app went live last week in the U.S., as well as in Canada, Japan, the U.K. and Australia, via the App Store or Google Play.

So, what did we learn this week? Well, they say April showers bring May flowers, but it seems the payments and commerce field started blooming early.

We’ll keep you posted when we see what May actually brings this year.

Have a good week.


New PYMNTS Study: Subscription Commerce Conversion Index – July 2020 

Staying home 24/7 has consumers turning to subscription services for both entertainment and their day-to-day needs. While that’s a great opportunity for providers, it also presents a challenge — 27.4 million consumers are looking to cancel their subscriptions because of friction and cost concerns. In the latest Subscription Commerce Conversion Index, PYMNTS reveals the five key features that can help companies keep subscribers loyal despite today’s challenging economic times.