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GUEST OPINION Apple Pay Arrives in the UK – but what does it mean for small retailers?

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When news of Apple Pay’s UK arrival became a reality, a lot of buzz surrounded the 250,000 retailers and the majority of banks (not including Barclays … yet) who would support it across the country, but how will it impact retailers? Here’s how, says Henry Morland, chief product officer, Brightpearl

Little if anything was said about how this new payment option will impact business for the smaller independent retailers– nor how they might use this technology to drive growth. While there is an opportunity to scale and capture the increase in mobile shopping, it doesn’t lie completely in the Apple basket.

Here’s why.

First, let’s look at US consumer adoption of Apple Pay ten months in. Gallop research found only 21 percent of iPhone 6 owners used their device to process their Apple Pay transactions – and according to, 60 percent forgot about the service after using it for the first time.

Here in the UK, Apple Pay is expected to see a more rapid adoption because we’re much further along in the use of near field communication (NFC) and contactless payment. But you can’t assume every retailer is using a standard payment encryption device (PED) to support NFC. If not, an upgrade investment will be needed.

There’s also a disparity between Apple Pay in-store and Apple Pay online. Shopify is popular among independent retailers, with its software providing an e-commerce storefront solution to process online sales, manage inventory / product listings and process payments, including Apple Pay. But currently Shopify’s in-store Point of Sale (POS) hardware and credit card readers doesn’t accept Apple Pay, with their website only stating it will “be released soon”.

The cap for contactless transactions – currently £20 and due to rise to £30 in September – is another hurdle to be cleared. Limiting consumer spending to a few drinks at a pub or a latte at their local café is likely to lessen the adoption and usage numbers.

But to accept higher-value payments, retailers will need to spend money and invest in terminals enabled with the Consumer Device Cardholder Verification Method (CDCVM). This adds an extra layer of security in processing mobile payments – and as it’s supported by payment card networks, it removes merchants’ liability for fraud when used for Apple Pay transactions.

Combined, these challenges emphasise why independent retailers should focus less on supporting Apple Pay and more on their overall mobile strategy.

Goldman Sachs is predicting global mobile commerce will reach $298bn next year before more than doubling to $626bn by 2018. But the key challenge for retailers is ensuring the shopping experience they’re offering is designed with smart-phone users in mind, visually and operationally.

The traditional mobile buying experience usually involves taking a typical online store viewed on a laptop and cramming into a small screen. This doesn’t work.

A mobile-friendly designed m-commerce site is essential, as is a smooth checkout process. Requiring mobile shoppers enter sensitive information like their credit card numbers into multiple forms on multiple screens just isn’t popular with shoppers.

This is where mobile payment solutions like Apple Pay, PayPal, and Google’s Android Pay come into the picture. The secure, single-touch pay button provides an easier mobile web checkout – and new software such as Shopify’s Mobile Buy enables retailers to integrate single-touch mobile payment capabilities into their mobile apps.

Looking down the road, Apple will begin supporting the addition of merchant’s loyalty cards to a user’s Apple Wallet – and it’ll also be available from Android Pay when that makes it to the UK.

In the US, vertical markets like travel and hospitality are beginning to introduce and embrace new mobile capabilities. For example Marriott Hotels enables guests to use Apple Pay for check-in to bypass the lobby line – or to instantly pay for dinners and drinks by the pool (the US is not restricted by a contactless spend cap). Others have begun rolling out smartphone keyless entry for guests that eliminates the lost-card scenario and appeals to the mobile centric millennial generation.

The key point for retailers to take in is that consumers use different mobile devices, have different shopping habits and choose different ways to spend their money. They need to support mobile payments across all device types, not just Apple Pay, to achieve a greater opportunity for increased sales.

Aligning the scale of their business to the growing demands of today’s mobile centric shopper will greatly impact their competitive edge and ability to stay ahead of today’s digital curve.

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