Apple Pay launches in Britain as last major hold-out bank gives in

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Apple introduced mobile payments in Britain on Tuesday, hoping to make a splash with consumers familiar with using cards for tap-and-go purchases, as resistance from hold-out banks and stores appeared to evaporate.

A quarter of a million outlets will offer Apple Pay, from London Underground stations to coffee shops, retailers and travel businesses, making it more widely available than when it first launched in the United States last year.

Tap-and-go payments have surged in recent years, with growing acceptance among banks, retailers, card issuers and consumers, but the real tipping point in Britain came with the London Underground’s introduction of “contactless” payment methods.

A customer uses an iPhone to pay via Apple Pay in London

“We actually think that the UK can be our leading market for Apple Pay, given the unique characteristics [of the market],” said Jennifer Bailey, vice president of Apple Pay.

Convenience, as ever, is key and Apple says its new service is even quicker than rival contactless payment options. Set-up is via an Apple app on an iPhone 6 or late-model iPad. Customers use the built-in camera to scan an image of their credit or debit cards and then confirm their details by text message, email or a phone call from their bank.
To make payments, customers hold their phone, tablet or Apple Watch near a merchant’s existing contactless terminal while touching the mobile device’s fingerprint ID button or double-tapping the watch face.
The beauty of the scheme for Apple is that it offers another way to bind customers more tightly to its phones, tablets and watches, while also taking a small slice of the bank transaction fees on each payment made.

Apple Pay will eventually be supported by all major British banks. Even Barclays, the last major hold-out, confirmed on Tuesday that it would take part.

In the meantime, 70 per cent of all credit and debit cards will accept Apple Pay, including cards offered by MasterCard , Visa Europe and American Express. That figure will top 82 per cent once Barclaycard is ready, Bailey said.

“We have been surprised that so many banks have signed up to support Apple Pay,” said Benjamin Ensor, an analyst at Forrester Research. “It’s worth asking what Apple Pay brings that the banks can’t do themselves.”

His answer is that Apple has managed to win over banks, retailers and even telcos that had refused to cooperate with one another for similar services.

Ensor, however, has yet to be convinced that Apple Pay will win both the hearts and minds of customers in the way the company’s other products have.

“Are people crying out for a really different method of making payments? I think that’s not yet clear,” he said. “Consumers just want to buy stuff.”

Customers use Apple Watches to pay fares in the London Underground.

Customers use Apple Watches to pay fares in the London Underground

Apple has played its part in that respect, winning support from London Underground and a large range of retailers.

The company had learnt from Apple Pay’s launch in its home market last October, when a number of major US chains pushed back because the service did not work with the customer loyalty cards that many retailers rely on to collect customer data.

Last month Apple said it would begin accepting private-label credit cards and that retail chains can work with the company to upgrade their loyalty programmes to work with Apple Pay.

“We are actively working with UK retailers on loyalty programs,” Bailey said.

Analysts said that while contactless payments have caught in London, adoption has been slower across the country. However, Apple said it was working with retailers and e-commerce sites to support take-up.

No credit card information is stored within Apple Pay, reducing vulnerability to hackers. It also relies on higher levels of user identification, such as fingerprints.

“With multiple levels of security, it’s designed from the beginning to be more secure than a credit card,” Bailey said.

But for all its efforts in the United States and Britain, the speed with which Apple has expanded in consumer electronics through international product launches will be hard to match with Apple Pay. The service does not benefit from a unified global payments market and will have to launch country by country.

“We are actively working on expansion plans,” Bailey said, but she declined to comment on reports that China, South Korea and Canada could be among the next target markets.




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