Apple figured out a new way to lock users in. The appleCard!

Computer company offering consumer products. Sure.

Computer company having its own storefronts and online store. Done.

Computer company offering their own media services. Ok.

Computer company offering a credit line to encourage purchasing... Fine...

Computer company becoming its own credit card company........ ?

Ok, this is something new.

The big three credit card companies, well two are processors, and banks license the name and ability to use the processing of the brand ( MasterCard and Visa.) These two and American Express ( who is a true credit card company bank and processor) all originated directly from the banking industry.

Discover was the creation of Sears which at the time was the most powerful and richest retailer in the United States. Sears pioneered the use of a credit line to encourage people to use Sears as their primary store. This allowed Sears to become one of the most powerful companies in the world. In the late 70s, Sears started to expand its internal credit processing network to compete with the other processing based banks through a self-funded credit card called Discover.

Discover disrupted the market due to its lack of fees, high credit limits, and generous rewards programs. This move, while revolutionary to the credit card industry led to the downfall of Sears. This and other company decisions led Sears away from their core market of being a retailer. They were not able to see the slowing use of malls and the rise of online purchasing. Eventually, Discover was sold off and thrives to this day. One can argue that other than dead hub stores in malls, Discover is the only remaining portion of Sears left.

Now Apple is getting into this game. They have created a credit card that is dependent on their consumer technologies for use. The card is intended to be a market disrupter with a focus on privacy. The card has none of the traditional features like a number, CVV, expiration date, or signature.

Since the focus is on privacy, all that is done on the back-end is transaction approval or denial. All information about the purchase is stored locally in the Apple Device and not in external servers.

The technology is highly dependent on Apple's Apple Pay NFC system that is becoming more common. A physical card will be available but will require an Apple device to be present for the transaction to take place.

Well, good luck. I can already see that Apple will embed this into all of their mainline products and it will be successful simply due to the number of users out there. More device lock in for Apple, which means more devices sold. Switching to Android will not only mean buying new apps and migrating your data, but it also means switching to a new credit card company. Well played Apple. This ensures that Apple will only have to put out a functional level in their product line to guarantees customer retention.

Personally, I do not want to be the person behind someone in line trying to get not only the watch to work with the credit card terminal at Walmart, but also making sure that the app on their phone is working correctly. If this is successful, I see Capital One building something similar that will be cross platform and just work.