Dan Salmons, Managing Director, PayPoint Mobile and Online
As expected, the fanfare accompanying the launch of Apple products and services was not absent when Apple Pay launched in the UK a couple of weeks ago. This is not just the latest in a long line of digital wallets, but a product that has the potential to severely disrupt traditional payment methods. Already establishing itself as a market leader in the space, Apple Pay could actually have an even more significant impact on the wider uptake of mobile payments, providing the smooth and simple customer experience that consumers demand in mobile payments more generally.
The mobile payments channel is continuously seeing more and more adoption, with Juniper predicting that the global market is set to increase by 150 percent in 2015 alone. The UK is undoubtedly a primary contributor to this boom; according to data from the UK Cards Association, Britain was leading the way in Europe in terms of contactless payment adoption in December 2014, primarily due to smartphone ownership. The contactless culture in the UK will only be perpetuated by the launch of Apple Pay, as mobile payments become truly integrated into the mainstream.
While the noise about Apple Pay has been about the impact it might have in the retail space, where it certainly has the potential to be disruptive, it’s the in-app payments aspect that I find the most exciting. This has been available since launch, but doesn’t seem to have gained quite as much traction in the media.
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In fact, a number of leading apps have already announced that they will take Apple Pay for payments in their apps including Groupon, OpenTable, Target and Kickstarter, to name just a few. Partnerships with social media players such as Pinterest give Apple Pay a competitive edge and help those sites monetise their platform – further differentiating Apple Pay from other offerings such as Google Wallet. In addition, Apple is also actively promoting this payment method through the App Store. Whilst the setting up of these partnerships may have been aided by the precedence of Apple as a brand, this will likely encourage other companies to follow. If companies aspiring to make it in this space do indeed pursue similar partnerships with well-known apps, we may soon see mobile payments permeate into every aspect of the consumer experience.
I think there’s a very sound logic for online and mobile merchants to incorporate Apple Pay – and the reason why? To improve the consumer experience. Payment experiences today are not always that smooth on a website. What’s more, when this is translated to a mobile device, the effort of entering card details for example, can be a big put-off for customers. As more and more customers move to use their mobile devices for purchases, what digital merchants need is an elegant payment experience, and ideally one that millions of consumers already have access to.
This is where Apple Pay comes in. It triumphs the many other generic digital payment solutions through both the brand awareness and reach that Apple has. Unless you are a payments geek, you could be forgiven for not noticing when other e-wallets have come and gone. But when Apple does something – whether it introduces a new add-on or provides an update – consumers take notice. In many cases, people find that they already have the device to do it (or use it). As a result, I believe there will be very rapid acceptance of Apple Pay for digital payments here in the UK, far faster than in face-to-face retail where there is a dependency on the roll-out of physical terminals.
Of course, Apple Pay doesn’t have it all its own way. Up until now, it has only been available in the US; it only works with latest iPhones/iPads that have TouchID; and of course, we must not forget that not everyone has an Apple device – many people have an Android phone. As a result, the Apple Pay app cannot be the sole payment method offered. If past experience is anything to go by, Apple’s affluent, digitally-savvy customer base will make disproportionate use of the new technology, and that alone is enough to make a big mark in the mobile payments world.
The year before the Apple Watch launched, only 800,000 smart watches were sold globally. For the year after, the predictions reached 20 million, and not all of these were for the Apple Watch. If the same thing happens with Apple Pay, then it may prove not only to be an important new payment mechanism, but a powerful catalyst for consumer uptake of mobile payments generally.