Apple is collaborating with HDFC Bank to introduce its credit card, known as the “Apple Card,” in India. The company’s CEO, Tim Cook, met with HDFC Bank CEO and MD Sashidhar Jagdishan during a visit to India in April. Apple is also in discussions with the National Payments Corporation of India (NPCI) regarding the potential launch of Apple Pay in the country. The details of these discussions are unclear, whether it involves the integration of Apple Card with NPCI’s Rupay platform or the Unified Payments Interface (UPI). In India, only banks are authorized to issue credit cards, and UPI enables convenient mobile payments using QR codes.
This move aligns with the increasing trend of mobile phone-based payments, as technology giants like Apple, Google, Amazon, and Samsung are actively expanding into the payment sector and pursuing opportunities in financial services. Apple has engaged in discussions with the Reserve Bank of India (RBI) regarding the credit card, although the RBI has reportedly advised Apple to follow the standard procedure for co-branded credit cards without any special considerations.
Official statements were not provided by Apple or HDFC Bank in response to email queries, and the RBI and NPCI did not respond to inquiries. The discussions between Apple and HDFC Bank are still at an early stage, and a final decision has not been reached regarding the launch of the Apple Card in India. It remains uncertain whether Apple is willing to make necessary compromises to adapt the card for the Indian market.
Apple currently offers a premium credit card in the United States, in collaboration with Goldman Sachs and Mastercard, which is made of titanium and positioned as a high-end offering. The sources suggest that HDFC Bank is an attractive partner for Apple due to its stature, and banks and other brands would be willing to negotiate favorable terms to secure a partnership with Apple.
Reasons for Apple’s Interest in India
India has become a significant focus for Apple due to the country’s growing iPhone sales and market potential. In the fiscal year 2023, Apple’s revenue in India reached around Rs 50,000 crore or $6 billion, marking a 50% growth compared to Rs 33,500 crore or $4 billion in the previous fiscal year. India represents a crucial market for Apple’s global services revenue, which amounts to approximately $80 billion. Leveraging the Apple Card to facilitate a substantial portion of these transactions could have a considerable impact.
During Tim Cook’s visit to India in April, Apple inaugurated exclusive retail stores in Delhi and Mumbai. The company has also been relocating a significant portion of its iPhone production to India, with the country projected to account for almost 25% of Apple’s total mobile phone production in the next three to four years.
Although Apple currently holds about 4% of the overall smartphone market in India, which corresponds to around two crore (20 million) users, there is potential for significant growth. If 20-30% of Indian smartphone users transition to iPhones over the next decade, similar to trends observed in other middle-income countries, India could become Apple’s third-largest market, following the US and China.
One factor that may have influenced Apple’s decision to launch the Apple Card in India ahead of other countries like Japan or in Europe is the existing limitations on card payments in India. Currently, Apple does not accept card payments in the country. Most App Store purchases in India are powered by the Unified Payments Interface (UPI), while card payments are not supported. This situation arose due to regulatory directives from the Reserve Bank of India (RBI) regarding the storage of card details and payment data on Indian servers, as well as the use of one-time passwords (OTPs) for standing instructions. These regulations make UPI a more seamless option for Apple customers.
According to one of the sources mentioned, Apple has been cautious about complying with these directives, leading to the temporary halt of card payments in India. It is logical for the company to explore launching its own credit card before resuming card payments, thus preempting the use of other credit cards on the platform. Currently, the Apple website only lists Apple Account Balance, net banking, and UPI as approved payment methods.
Is Apple Willing to Make Compromises?
In contrast to the United States, Apple cannot introduce a simple card with only the Apple logo and the customer’s name on the front in India. The regulatory framework requires that Apple takes a subordinate role while the bank assumes the primary position. In the US, the Apple Card displays the names of Goldman Sachs and Mastercard on the back, and it does not include a printed card number. However, these liberties cannot be taken in India due to the current regulations for co-branded credit cards.
The Reserve Bank of India (RBI) made it clear last year that the bank’s partner, including Apple, cannot store customer data or transaction data. Even Apple cannot store Apple Card details on its platforms, which differs from the practices in other countries where Apple operates.
According to one of the sources mentioned, it is an appealing prospect for banks to attract premium Apple customers for their credit card offerings. However, due to strict regulations, these banks cannot provide significant privileges or concessions in this regard.
The Value Proposition of Apple Card for Customers
The Apple Card offers several benefits to customers. It is seamlessly integrated with Apple Pay, and the cashback rewards earned through the card are deposited into the user’s Apple Wallet, where they also accrue an annual interest rate of 4.15 percent.
Furthermore, the Apple Card does not impose any annual fees on its users. In the United States, Apple allows cardholders to purchase Apple products in interest-free installments. In addition to earning around 3-5 percent cashback on Apple product and service purchases, Apple may establish partnerships with other premium brands to offer 2-3 percent cashback or reward points on purchases made with those partners.
In the United States, Apple also provides a daily 2 percent cashback when customers use the Apple Card through their Apple Watch or iPhone. This is achieved by adding the credit card to Apple Pay and making payments using tap-and-pay functionality at NFC-enabled payment terminals. Additionally, the card offers 3 percent cashback at select major merchants.