Apple Pay Goes Live in U.K. (July 14, 2015)
Apple Pay went live today in the U.K., and analysts say its prospects of catching on with consumers are promising, at least from the hardware perspective. Thirty percent of U.K. consumers own an iPhone, and the iPhone 6 garnered a 20 percent share of all smartphones sold in the country in the fourth quarter of 2014, according to a recent study from Datamonitor International. A healthy percentage of U.K. consumers—37 percent—are regular credit card users, and 42 percent are interested in making contactless payments via a mobile phone, Datamonitor found.
The U.K. is ripe for mobile payments expansion. A high proportion of U.K. merchants have enabled contactless payments at the POS within the last few years, and total contactless payments volume tripled in 2014 to £2.3 billion (US$3.5 billion) versus 2013, according to the UK Cards Association. Apple Pay has “significant opportunity” for growth in the U.K., but it faces challenges from rival m-payments services, notes Theresa Jameson, a senior analyst with Datamonitor. So far only a handful of banks have adopted Apple Pay, including NatWest, Royal Bank of Scotland, Nationwide, Santander and Ulster Bank. Other financial giants, including HSBC, Barclays Bank, Lloyds Banking Group, First Direct and TSB aren’t integrated with Apple Pay yet, though Barclays promises it will do so in the future.
A bigger immediate threat to Apple Pay could be Zapp’s forthcoming “Pay by Bank” mobile app, Jameson suggests. Like Apple Pay, Zapp’s mobile payment app is backed by several major U.K. retail chains and payment processors, but Zapp is designed to integrate with existing mobile banking apps, which is a crucial advantage in driving consumer adoption, according to Jameson. “This [feature] notably gives Zapp direct reach to the 27 million U.K. consumers who have mobile banking across both Android and iOS devices, which will enable it to gain scale and traction at a much faster rate than Apple Pay,” she believes.
Apple Pay is launching in the U.K. with the £20 (US$31) limit per transaction that exists for all U.K. contactless payments, to protect against fraud. In September that limit will rise to £30 (US$47), and Apple Pay may increase its per-transaction limit then, according to reports.