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Apple Pay: A Kairos moment for mobile payments in the UK?

15th Jul 2015
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In Greek mythology, Kairos was the son of Zeus and the spirit of opportunity, wielding a long mop of hair in front of his brow to indicate that opportunity could only be grasped as he approached.

In declaring the launch of its mobile payment solution in the UK, Apple’s CEO, Tim Cook has apparently gone from grabbing Kairos’s locks, to riding on his back across the Atlantic while firmly pulling on his pigtails.

Apple Pay was always going to be met with a different reaction to other mobile payment solutions – let’s face it, it’s Apple. However, in bringing mobile payment from its US launch last September to the UK, the San Cupertino-based tech giant is about to enter a market seemingly desperate to ‘give mobile payments a go’, but in need of some further persuasion.

Statistics say that mobile finance is indeed becoming more popular in the UK, with mobile banking in particular currently accounting for almost £1 billion of daily retail bank transactions on these fair shores.  

However, the use of mobile phones for physical or in-store payments has shown signs of stagnation, with eMarketer predicting last year that it would be 2016 before any further traction in the market started showing.

The desire for mobile payments still exists though: Surveying shoppers in the UK during the Christmas rush, The Logic Group’s 2014 Christmas Shopper Survey found that 74% of British shoppers would “prefer to use contactless card payments” in 2015, while 54% would be happy to pay for their 2015 Christmas shopping using mobile payments in-store.

So if it’s just gentle encouragement the British public needs, will Apple Pay be the straw that breaks the camel’s back?

Forrester analyst, Thomas Husson thinks so, citing the technology infrastructure in place in the UK as reason to expect greater uptake than across the pond:

“I believe adoption in the UK will be faster than in the US for a number of different reasons,” he wrote in a blog post last week. “[Firstly] the Near Field Communications (NFC) and contactless ecosystem is much more mature in the UK. [Also], there is no consortium of retailers like MCX with ConcurC led by Walmart willing to launch a competing offering.

“[Finally] the inclusion of Transport for London as a partner is a way to raise awareness and accelerate daily usage.

“Apple will benefit from a larger installed base of compatible devices (iPhone 6 and 6+) and from the awareness created by the media buzz from the US launch.”

NFC bonus

The maturity of NFC should not be overlooked. Apple, which initially snubbed NFC technology in its iPhone 5 has since made amends through its subsequent iPhone 6 and Apple Watch releases, with Apple Pay 100% reliant on NFC.

“This is a pivotal moment for digital payments and one that demonstrates the momentum behind mobile and contactless services,” says Steve Perry, chief digital officer at Visa Europe.

“Visa Europe has led the rollout of NFC payments ever since we launched the first contactless cards and terminals in 2007. Today there are more than 1.5 million Visa contactless terminals in stores across Europe – all ready to take mobile payments. Apple’s decision to enter the market reflects the scale of opportunity that exists in digital payments today. Its support will drive awareness and usage of contactless services around the world – we anticipate a “halo effect” that will benefit all players in the mobile payments ecosystem.”

However, this reliance on NFC, coupled with the minimal number of devices it will be available on, could hamper Apple’s proliferation in the market, according to Dan Wagner, eCommerce veteran and CEO of Powa Technologies, who says its availability will need to be more widespread to convince a broader demographic of British shopper.

“What shoppers really want is a ubiquitous solution which allows them to buy products anywhere, at anytime, from a range of mediums, using any digital device.

“The decision to only use NFC also drastically reduces the scope of its usage for retailers as they have to support NFC terminals.  Apple Pay doesn’t support online shopping either - once again limiting what consumers can use it for.

“Despite Apple being an instantly recognisable brand, Apple Pay’s limitations mean it can only be seen as just another way to pay for things. To stand out in an already crowded market, new entrants should provide more than just a payments service. Many retailers don’t see a benefit in Apple Pay because they want a solution that will help them create an omnichannel sales offering, engage better with their customers and understand their shopping habits.”

If this is the case, Apple Pay’s focus may have to initially lie with making its in-app mobile payment methods smoother, as opposed to relying on proliferation through in-store uptake. This is something James Davies, Head of Channel Partnerships EMEA at xAd agrees with, stating that the launch means “mcommerce will inevitably increase because the service works in two situations, in-store and in-app.

“Apple Pay makes [in-app mcommerce] much easier by reducing the number of hoops a person has to jump through to order a product on their mobile device especially when out and about.”

However, the in-store element is undeniably still Apple’s Kairos moment, and with 88% of UK retail transactions still happen in-store there’s no reason why a brand as slick and trusted as Apple can’t help bring a level of excitement among potential mobile payment users that has not previously been seen before.

The brand managed it with smart watches and its Apple Watch release, and even managed it with the less than tangible iCloud launch in 2012, until last year’s hacking scandal tarnished the product’s reputation somewhat.  

In this respect, there will be no room for maneuver. Security and trust remain a major concern for consumers switching to contactless and mobile payments, and Apple Pay’s decision to go NFC will mean it will need to prove to potential users that it’s a safe payment alternative.

“At a time when many in the market are moving towards biometric for payments, Apple’s decision to go for NFC – a technology that up until now has struggled to clearly stamp its mark on the payments industry - is a bold one,” says Anthony Duffy, director for retail banking at Fujitsu UK & Ireland.

“While Apple’s implementation will undoubtedly help NFC recapture interest, the industry needs to keep working towards the adoption of more advanced payment technologies – such as biometrics – which will enable retailers and payment companies to provide a more secure service for their customers.”           

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