Apple Pay: Business opportunity versus hype


By Rich Wagner, CEO and founder at Advanced Payment Solutions

There’s no doubt that Apple is the master of cool technology. Eager customers across the globe camped and queued to be the first to purchase an iPhone 6 back in September last year and ten months on, rumours around the iPhone 6S launch are already buzzing around online.

Predictably, the UK launch of Apple Pay earlier this month was met with similar excitement. The contactless payment system that lets people use their iPhones to tap and pay saw high street names including Boots, Waitrose, Marks and Spencer and Transport for London (TfL) all signing up to provide the service to customers.

Will the novelty factor translate?

Those who believe Apple Pay will immediately revolutionise the way we pay are likely to be disappointed. In my experience, new payments technology takes years to reach mainstream adoption. Back in 1989, while working for Visa, I was involved in the development of the card giant’s contactless payment strategy. Here we are, more than 20 years later, finally experiencing mass adoption, with contactless transactions in Europe surging by 174% year on year at the end of 2014 [Mastercard 2015].

As with contactless payments at the time, the key barrier to immediate Apple Pay uptake is that mobile payments do not solve a particular problem – yet. Back in 1989, the debit card had only been in existence in the UK for two years – the population was certainly not ready for ‘tap and go’ [The UK Cards Association]. Fast forward a couple of decades and similarly, consumers are largely happy to continue using their cards for payments for now, rather than embracing relatively new mobile technology.

EE has appeared to experience the painful battle of encouraging users to embrace new payments technology. In 2013 the telecoms provider launched the ‘Cash on Tap’ app, which provided a similar payments function to Apple Pay.

As an EE customer, I signed up to the service. It was really cool to be able to make a transaction over my phone. However, it wasn’t long before I reverted back to using my contactless debit card because, for me, this product didn’t solve a problem nor make my payment transaction any easier. I don’t think I’m alone; after two years, it only has 50,000 downloads (from the 20 million customers that are on the EE network). Furthermore, it generated just over a 1000 reviews on Play, with nearly half of them rating it with only one star.

Time for an Apple Pay takeover?

It is not a matter of “if” mobile payments eventually take off, but “when”. However, while many Apple enthusiasts may be hoping for an immediate Apple Pay takeover, the truth is it will be a case of years rather than months before such technology becomes mainstream.

It will take time for mobile payments to become mainstream and with the commercial opportunity for Apple Pay reduced in this market it will be interesting to see whether they are willing to match the time and effort invested into the US market.

That said, Apple strikes me as one of the few operators outside of the card space that has really thought about its payment offering. Apple is renowned for its deep insights into the mind of the user and this puts the company in a strong position to embrace the consumer payments space.

Moreover, it is clear from the firm’s decision to partner with the likes of MasterCard and Visa that Apple recognises the importance of sticking with what the company is good at. As such, Apple has acknowledged that it is not best placed, and maybe even not trusted by its customers, to store sensitive payment data, so has been smart to align itself with the credibility and expertise of the biggest card schemes.

Love it or hate it, Apple’s customer experience is best in class, and in my opinion, the company has got to be the best collection of minds to crack the seamless, frictionless payment experience that consumers demand. The UK launch has ultimately taken us one step closer to a future of mobile payments, but however cool the technology, it will take years to reach anything near mainstream adoption.

Advanced Payment Solutions is a provider of payment solutions and prepaid cards.


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