Apple taps HDFC Bank to launch credit card, in talks with NPCI for Apple Pay

The Cupertino-based tech giant had also held discussions with the Reserve Bank of India (RBI) on the modalities of the card

iPhone maker Apple is in talks with banks and regulators to launch its credit card, dubbed "Apple Card," in India. The company's CEO, Tim Cook, met with HDFC Bank CEO and MD Sashidhar Jagdishan during his trip to India in April, according to two sources familiar with the matter.

The technology giant is also holding discussions with the National Payments Corporation of India (NPCI) to possibly launch Apple Pay in the country, a third source told Moneycontrol. It is not clear whether these discussions are regarding its credit card being powered by NPCI's Rupay platform or whether this is for Unified Payments Interface (UPI). The advantage of launching a Rupay Credit Card is that it can be linked to UPI as well. In India, only banks are allowed to launch credit cards. UPI allows customers to make seamless and fast payments by scanning QR codes through mobile phones.

This comes at a time when a significant number of payments are being increasingly made through mobile phones. Technology giants such as Apple, Google, Amazon, and Samsung are actively pursuing expansion into the payments sector and have ambitious plans in the financial services space. These companies have developed payment apps and are looking to make significant strides in this area.

The Cupertino-based tech giant had also held discussions with the Reserve Bank of India (RBI) on the modalities of the card, Moneycontrol has learned. According to one of the sources mentioned above, the regulator has asked Apple to follow the regular procedure for co-branded credit cards, without offering any special consideration for the company.

Both Apple and HDFC Bank did not offer any statements to the email queries sent to them. The RBI also did not respond to an email inquiry about whether the regulator had held discussions with Apple. NPCI did not respond to text messages sent by Moneycontrol.

According to the sources, Apple is looking to launch its Apple Card, a co-branded credit card with HDFC Bank in the country. The discussions are in the early stages and a decision has not been arrived at, the sources added. The nature of the discussion, as well as when Apple intends to launch this in India, could not be determined.

Apple was looking at significant deviations from the standard co-branded credit card model in India, one of the sources said. It is not clear whether the company is willing to make those compromises in order to launch the card in India, the source added.

Moneycontrol was unable to ascertain whether the discussions with the regulator took place through Apple executives or its potential banking partner.

Apple currently operates a premium credit card in the US, which was launched in partnership with Goldman Sachs and Mastercard. This card is made of titanium metal and is positioned as a high-end offering.

"Apple works only with the biggest and the best and hence the discussions with HDFC Bank. While a lot goes into building partnerships, banks and other brands would be willing to sweeten the deal terms to get Apple on board," said one of the sources mentioned above.

Why India?

India has been a focus country for Apple for the last couple of years, with iPhone sales growing at a rapid pace, albeit from a low base. Apple's revenue in India touched around Rs 50,000 crore or $6 billion in FY23, representing a 50% growth over Rs 33,500 crore (around $4 billion) in FY22. Apple's global services revenue stands at around $80 billion. Converting a significant portion of these transactions through the Apple Card would have a substantial impact.

During Cook's visit to India in April, the company launched exclusive retail stores in Delhi and Mumbai. Additionally, the company has been shifting a significant portion of its iPhone production to India and the country could see almost 25% of Apple’s total mobile phone production in the next three to four years.

Apple currently holds approximately 4% of the overall smartphone market in India, which accounts for roughly two crore users.  If 20-30 percent of Indian smartphone users switch to iPhone over the next decade, as is the case in other middle-income countries, India could become Apple's third-largest market, after the US and China.

However, what might have prompted Apple to consider launching the Apple Card in India before Japan or other European countries is the fact that Apple does not currently accept card payments in India. In India, UPI powers most App Store purchases, apart from iCloud services such as storage and music.

This was after the RBI said that third-party websites should not store card details on their platforms, but only in a tokenised form. The regulator also insisted that all the payment data should be stored only on Indian servers. Another card-related direction was to take one-time customer permission through OTP for standing instructions meant that UPI was more seamless for Apple customers.

"Apple is cagey about several of these directions. Hence the company decided to stop card payments in India temporarily. It makes sense for the company to explore launching its own credit card before it restarts card payments in India thus preempting other credit cards being used on the platform," one of the sources mentioned above said. The Apple website still mentions only Apple Account Balance, net banking, and UPI as the approved payment methods on the platform.

Is Apple ready for compromises?

Unlike in the US, Apple cannot bring a plain card with just Apple's logo and the customer's name on the front. The regulations will require that Apple takes the back seat and the bank will take the driver's seat. The Goldman Sachs name and Mastercard also appear on the backside of the Apple Card in the US. The card also does not have any card number printed on it. These are not liberties that Apple can take in India as per the current co-branded credit card regulations in India.

Last year, the RBI clearly stated that the bank's partner cannot store customer data or transaction data. Even the Apple Card details cannot be stored on Apple platforms, which is not the case in other countries that Apple operates.

"To get all the premium Apple customers on board for their credit card is a great proposition for the banks, but none of them can offer any substantial privileges as the regulations around this is strict,” one of the sources mentioned above said.

What Apple Card brings to the customers?

The Apple Card is integrated with Apple Pay, and the reward money is deposited into Apple wallet and earns an annual interest rate of 4.15 percent.

The Apple Card also does not have any annual fees. In the US, Apple let its card users buy Apple products in installments without any interest. Apart from around 3-5 percent cashback on purchasing Apple products and Apple services, the company could tie up with other premium brands to offer 2-3 percent cashback or reward points on purchases from these partners.

In the US, Apple also provides a daily 2 percent cashback while using the card through Apple Watch or iPhone. This is by adding the credit card to Apple Pay and the payment is done using tap and pay at NFC (near field communication) -enabled payment terminals. The company also provide 3 percent cashback at major merchants.

Note: The story has been updated with additional information.