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GUEST OPINION Apple Pay: one year on

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Mobile payments have long been touted as ‘big’ but a year after the launch of Apple Pay in the UK – and with no real figures from Apple – Nick Black, CEO of UK app developer, Apadmi, discusses the real impact Apple Pay has had on retail in the UK.

Apple Pay was initially launched in the US in October 2014, arriving in the UK the following July. Hailed as ‘The Next Big Thing’ in tech, Apple Pay was widely believed to possess the power to change the face of payments, and in particular retail, as we knew it. But one year on, questions are being asked about whether Apple Pay has really lived up to its initial hype. With Apple’s reluctance in releasing figures about the popularity of this payment method in the UK,

Within the first three months of being launched, Tim Cook, CEO of Apple, was so assured Apple Pay would be a success that, during the company’s earnings call in January 2015, he declared it would be “the year of Apple Pay”.

And, in fairness to Cook, there were early indications that Apple Pay would gain traction in the world of contactless payments. After all, it did have the backing of some of the biggest payment players including Visa, American Express and Mastercard at its initial launch.

But as we reach the one-year milestone of having the Apple Pay service in the UK, questions as to whether it has changed the way consumers pay are being raised. Was 2015 really the year of Apple Pay?

So where did all the hype come from?

The apparent ease of which transactions can be made, plus the innovative new security measures (such as the fingerprint recognition software), steered the early conversations and got people excited for this new payment technology.

And Tim Cook’s comments only added fuel to the fire when he spoke of “unprecedented demand from merchants” and all of Apple’s partners and customers who “simply love the new service”.

For many consumers, the allure lay in the fact that instead of having to bring a purse or wallet every time they nipped to the shop or headed out for the night, they could instead just bring their iPhone – which would probably be with them anyway.

From the perspective of those developing apps, Apple Pay seemed to be a gift – we could easily incorporate this payment technology into apps by simply plugging in an API. Apple could be relied upon to do all of the heavy duty, making our jobs that bit easier.

From the outset, it seemed like Apple Pay was ticking all of the right boxes.

But a year on, can we really say Apple Pay has changed the face of payments?

It’s no secret that Apple has not exactly been forthcoming on the payment service’s performance in the UK. This reluctance could, in itself, be interpreted as an admission that Apple Pay has not been as successful as once anticipated.

In fact, it should be pointed out that in the year since Apple Pay’s UK launch, not one single piece of data has been released. This seems quite out of character for a company whose CEO was eager to declare the payment service’s incredibly bright future within the first three months of its initial launch.

As a result, it is impossible to determine just how well Apple’s mobile payment service has performed in the UK’s retail sector. The only thing we can go off is retailers themselves stating that they haven’t noticed many people whipping out their iPhones when paying for their goods, as uncovered by The Memo.

The one piece of information we can find, through educated guesswork, about the British public’s usage of Apple Pay is by looking at Transport for London’s figures from January 2016. These have shown 3.2 million journeys were paid for using “mobile devices” in the six months following Apple Pay’s UK launch.

With the iPhone being the only mobile device capable of making contactless payments, it’s a safe assumption that these were made via Apple Pay. However, this is a relatively low figure, equating to as little as 0.4% of the daily pay-as-you-go journeys on TfL.

To give some balance, this technology is still arguably in its infancy and there are many retailers across the UK that still don’t accept this as a payment method. For those that do, there are usually transaction limits. This means that British consumers have not yet reached the point yet by which they feel comfortable leaving their cards at home and fully relying on iPhones or Apple Watches as a sole payment method.

But all of this could change in time.

Does this mean 2016 could then become the ‘year of Apple Pay’ instead?

In short, probably not. But that doesn’t mean to say we don’t expect more and more retailers to begin to offer customers the Apple Pay facility.

We should also remember that earlier this year, Apple launched iPhone SE – its most affordable model to date with in-built Apple Pay capabilities. It may well be the case that we begin to see younger generations using this model and thus driving up levels of Apple Pay usage, creating demand for this facility to become more widespread.

At Apadmi, we recently did some research exploring the relationship between retail and mobile app technology. As well as uncovering that a staggering 97% of UK consumers carry their smartphones with them when shopping, we found that almost half (49%) are keen to use apps that offer modern payment options, such as Apple Pay.

This presents retailers, who may have been reluctant in the first instance to introduce Apple Pay, to reconsider their position. And, if you take into consideration Visa’s forecast that mobile payments will be used by up to 60% of Brits by 2020, it seems there is a golden opportunity for retailers to take advantage of.

It’s also important to be mindful of the fact that similarly to when contactless cards were first introduced, it was a case of encouraging people to change their paying behaviours. As such, in order to get more people using Apple Pay, there must be a similar spark in behavioural change. This won’t just happen overnight and so it needs time.

As a result, it can be argued that all is not yet lost and there are still opportunities for Apple Pay here. Particularly if you take into account the whopping £1.5 billion spent on contactless cards by UK shoppers in March 2016 alone. It’s just a case of having some Apple Pay-tience.

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