Apple disrupts payments with ability to pay for goods with a flick of the wrist

Apple has said its new service would be offered at about 250,000 locations across the UK and would cover 70 per cent of issued credit and debit cards.

However take-up of Apple Pay has been limited since it launched in the US in October. A survey by the Reuters news agency recently indicated that less than a quarter of the US’s leading retailers accept the facility.

Part of the problem for Apple is that Wal-Mart and 18 other stores have teamed up to launch a rival digital wallet scheme, and they have agreed not to support Apple’s facility until 2016 at the earliest.

However, one expert said that the tech firm should find it easier to attract support in the UK, where machines that accept tap-and-go payment card transactions will be able to work with Apple Pay.

“The equipment is already out there and Visa Europe has made the necessary infrastructure changes that pave the way for an Apple Pay rollout – it just hasn’t flipped the switch yet,” explained Chris Green from the Davies Murphy Group consultancy.

“In the US there have been instances where retailers have been committed to specific payment handling service contracts that have prohibited them from being involved in Apple Pay as it would represent a breach of contract for them.

“In contrast in the UK there aren’t those types of roadblocks.”

Apple said that the pharmacy Boots, the coffee chain Costa, the supermarket Waitrose and the London transport network were among British organisations that would support Apple Pay.
However, Barclays Bank was a notable omission from the list of lenders it said were committed to the plan.

Speaking about the announcement Lu Zurawski, Solutions Practice Lead Consumer Payments EMEA, ACI Worldwide said: “The launch of Apple Pay UK is potentially the most significant event in consumer payments for over 50 years, since the advent of cards and ATMs. As consumers become familiar with using phone devices to make purchases, we will probably see a plateau in the issuance of plastic cards in the next few years, followed by a long but inevitable decline of cards into obscurity.

“ApplePay has every chance of being a big hit in the UK, in particular in those parts of the country where contactless payments have already proven to be popular with consumers, such as within the M25 where consumers are benefiting from the ‘Oyster card training effect.’ UK card issuers are already scrambling to be part of the launch party in the hope their cards become ‘front of wallet’ – not just for physical purchases, but for online transactions too.’

“UK banks that move quickly to adopt ApplePay will need to carefully consider the economics of this new scheme and how to accommodate other alternatives too e.g. Samsung Pay, Android Pay or the Zapp scheme. Behind the scenes, bankers are trying to work out how to stitch together all these new payments operations, whilst offering their consumers an overall, easy to use service.”