Apple is currently negotiating with India’s HDFC Bank and regulatory bodies in an attempt to introduce its credit card, the “Apple Card”, to the Indian market, according to insiders. Tim Cook, Apple’s CEO, reportedly met with Sashidhar Jagdishan, HDFC Bank’s CEO and MD, during his visit to India in April.
In parallel to these talks, the tech behemoth is also in discussions with the National Payments Corporation of India (NPCI), signalling a potential plan to introduce Apple Pay to the country. It remains uncertain whether these conversations concern the Apple Card being powered by NPCI’s Rupay platform or integrating with the Unified Payments Interface (UPI). Notably, launching a Rupay Credit Card would allow it to connect to UPI, which facilitates swift and seamless payments through mobile phone QR code scans.
Apple’s move aligns with the trend of major technology companies, including Google, Amazon, and Samsung, broadening their horizons into the payments sector, a strategy supported by the growing popularity of mobile phone payments.
However, the Cupertino-based giant might face some regulatory hurdles as it is navigating through discussions with the Reserve Bank of India (RBI). According to sources, the RBI has directed Apple to comply with regular protocols for co-branded credit cards, declining any special exemptions. Responses from Apple, HDFC Bank, and the RBI to the email queries are yet to be received.
In the United States, Apple operates a premium titanium credit card developed in partnership with Goldman Sachs and Mastercard. The company’s approach to a potential Indian card is expected to deviate significantly from the standard co-branded model, given the strict regulations around the storage of customer data and transaction information.
The Allure of India
Apple’s interest in India, fueled by the rapid growth in iPhone sales and its revenue reaching around $6 billion in FY23, has seen the country emerge as a major focus. Capitalising on this growth by converting a substantial portion of transactions through the Apple Card would have a significant impact.
Apple has also been transferring a large portion of its iPhone production to India. The country is projected to account for almost 25% of Apple’s total mobile phone production in the next three to four years.
Apple currently has about a 4% market share of the overall smartphone market in India. If 20-30 percent of Indian smartphone users switch to iPhone over the next decade, India could become Apple’s third-largest market, following the US and China.
Despite the growing potential, the inability to accept card payments in India might have propelled Apple to consider launching the Apple Card before other markets like Japan or Europe. The RBI’s stipulation for third-party websites to only store card details in tokenised form led to the temporary discontinuation of card payments in India.
A Winning Proposition?
Bringing the Apple Card to India would involve substantial regulatory compromises. Unlike in the US, where the Apple Card sports just Apple’s logo and the customer’s name, Indian regulations dictate that the bank, not Apple, must be prominently featured on the card.
The launch of Apple Card in India would entail several customer benefits. The card, integrated with Apple Pay, deposits reward money into the Apple wallet which earns an annual interest rate of 4.15 percent. The card carries no annual fees and allows Apple product purchases in installments at zero interest in the US.
The company might also extend partnerships with other premium brands to offer 2-3 percent cashback or reward points on purchases. In the US, the company provides a daily 2 percent cashback while using the card through Apple Watch or iPhone, and 3 percent cashback at major merchants.
The potential introduction of the Apple Card to India’s credit card market will indeed be a development to watch as Apple expands its footprint in the country’s burgeoning financial services space.