Apple Card is now offering 3% rewards on purchases made at Walgreens

The tech giant's proprietary card, which is Mastercard-branded and issued by Goldman Sachs, will now give customers who pay with Apple Pay 3% rewards on purchases made at Walgreens, per TechCrunch.

The pharmacy chain marks Apple's second retailer partnership for rewards, following a similar 3% cash-back deal with Uber and Uber Eats announced at the time of the card's launch in late August.

An extension of Apple Card's rewards program could be the ticket to its US success.

Rewards were the area in which Apple Pay most lagged behind competitors. Initially, Apple Card's rewards structure offered 3% cash back on Apple products, 2% for any purchase made with the digital version of the card via Apple Pay, and 1% for purchases made with the physical companion card. While that system was designed to incentivize Apple Pay usage, it didn't necessarily stack up relative to the card's closest peers, which offer a wider array of cash-back categories — something we noted was Apple Card's biggest vulnerability, since rewards are the top factor in determining primary card status in the US.

Improving Apple Pay's top rewards category by selecting partners that customers shop with on a recurring basis, like Walgreens and Uber, could help improve habit formation around the card. This is good not only for keeping the card top-of-wallet, which brings in spend and, in turn, revenue, but also for Apple's major goal of driving Apple Pay engagement: Finding ways to incentivize customers for paying with their mobile wallet on a regular basis is a key way that wallets can see better engagement.