Following its initial success in the US, just when will Apple Pay come to Europe? And will the UK be one of the first markets to witness Apple Pay? Douglas Blakey writes
A new report from Timetric, ‘The Future of Apple Pay’ finds that within a few month of its launch Apple’s payment solution has already taken the lion’s share of mobile payments market in the US.
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I argued last year that it might make some sense for Apple to target one of the Scandinavian markets for its European debut.
Few agreed with me.
Apple Pay is a major milestone in the evolution of mobile payments,boosted inevitably by bearing the moniker of the world’s most valuable brand. It took only few months for Apple Pay to become the leading mobile payments solution in the US, with the firm claiming that two thirds of all contactless payments with Visa, MasterCard and American Express are on Apple Pay.
My colleagues in the Timetric research team are trying to persuade me that there is a good chance Apple Pay will enter the UK market in 2015. Vladimir Vukicevic, lead analyst at Timetric’s Payments Intelligence Centre, says: "countries with a high proportion of iOS devices, including Canada, the UK, Australia and Switzerland seem to be obvious contenders", adding: "While the product will almost certainly be launched in Canada in 2015, there is good chance that Apple Pay will also come to the UK in 2015".
"More than a third of the UK smart phones use iOS operating system, and although Apple Pay can only be used with the latest Apple devices – iPhone 6, iPad Air 2, iPad Mini 3 – which currently represents a relatively small proportion of Apple smartphone or tablet users, this is bound to change soon."
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By GlobalDataA major obstacle for Apple Pay in the UK, however, might be Zapp. This interbank mobile payment service, to be launched in 2015, won support from some of the major players in the UK payments market including Worldpay, Elavon, HSBC and Santander as well as retailers Sainsbury’s and ASDA.
To date, some of the largest players, including Lloyds, Barclaycard, RBS and Global Payments have so far opted out of the project.
But Visa and MasterCard will certainly support adoption of Apple Pay in the UK given that Zapp removes the card schemes from the payment equation.
Barclays, the pioneer of the UK contactless payments industry and leader in the payment innovation, including Pingit, its proprietary P2P mobile payment solution, have not to date participated in Zapp. With Barclaycard’s existing partnership with Apple in the US, Barclaycard appears a likely supporter of Apple Pay in the UK.
"Due to low interchange in the UK, Apple Pay will, at least initially, not benefit from significant profits. The main benefit for Apple will be to decrease the commoditiSation of Apple’s products" says Vukicevic.
Apple Pay will drive consumer awareness not just for its payments platform, but also for Zapp and the mobile payments industry as a whole. Apple Pay is seen by many as an inflection point, and its development over the next three to five years has the potential to shape the payments industry for decades to come. Samsung and Microsoft will almost certainly follow suit.
Apple Pay will not displace cards from our wallets, but whether or not it will turn into a game changer it remains to be seen.
As Vukicevic concludes: "To survive in the new environment the large international card networks and big banks need to reposition themselves in the payments market and find a unique value proposition through innovation and partnerships with key emerging players."
