The Apple Pay of Its Day

The Gimlet Eye
When Apple Inc. unveiled its Apple Pay mobile-payments service in September, and again when the service went live in October, the hype surrounding the new product—coupled with its fast uptake—put us in mind of another highly anticipated payments launch that took place almost 25 years ago. It, too, was surrounded by reams of hype, and it, too, went on in its early days to grab gobs of users.

We don’t bring this us up merely so we graybeards can revel in nostalgia, but rather because, after all, there may a lesson to be learned.

That long-ago product was the AT&T Universal Card. It’s still around, though AT&T sold the portfolio long ago to Citibank. And it’s not too much of a stretch to say it was the Apple Pay of its day—though with a few key differences, of course.

Rumors had been rife for months back in 1989 and early 1990 that the massive phone company was going to issue its own rewards credit card, cobranded with Visa or MasterCard and taking advantage of a new law allowing non-banks to set up a credit card bank. Other industrial and retail companies had done likewise, but few had the enormous national customer base served by Ma Bell.

The idea was that, with the goodwill and connections offered by a payments product, AT&T could sell more phone services. Similarly, rumors have swirled around Apple’s payments plans in recent years. And with Apple Pay now a reality, it will surely sell more iPhones.

Then, in March 1990, the card was launched. In a crowded field of rewards cards carrying hefty annual fees, the Universal Card offered the promise of no fee for life to those who signed up for it—much as Apple has held out the promise of rock-solid security to a public scared by data-breach headlines.

That proved to be a stroke of genius. Backed by nonstop publicity and AT&T’s well-oiled marketing machine, the card shot past the company’s wildest projections. In just nine months, 7.6 million cardholders had signed up, and they had logged $4.4 billion in charges. In like fashion, just 72 hours after Apple Pay launched, it had already attracted a million users.

But Apple has one big advantage that eluded AT&T. The phone company was viewed by the banks and Visa as a hostile interloper. Some banks even petitioned the Federal Reserve in hopes of having Universal Card shut down as an illegal operation. Today, though the card survives, it is virtually forgotten.

By contrast, Apple Pay enjoys the favor of banks and the networks. And that may yet prove Apple’s greatest masterstroke.

John Stewart, Editor  |  john@digitaltransactions.net