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digital money
Apple Pay Branches out of the Orchard
several financial institutions,
such as Nationwide, NatWest, Santander, MBNA, HSBC, the Royal Bank of Scotland and Ulster Bank. Barclays has plans to par- ticipate and many others are considering it. Major merchant backers include Boots, Lidl, TfL and Marks & Spencer. Merchants only need contactless terminals to accept it.
Many of our GPS clients ask if Apple Pay can be used abroad, but so far acceptance outside the U.K. is inconsistent. Apple will resolve this issue as it rolls out into more countries, but it requires consumer education in the meantime.
Transit Speed Bumps
TfL, which has been championing the use of Apple Pay for transit riders, has a page on its Website devoted to educating Apple Pay users on avoiding problems. Apple Pay may not work for overseas travelers without a U.K.-issued card linked to the app, or users may be charged currency conversion fees. TfL advises passengers to check with their issuers.
If the phone or watch battery
dies in transit, passengers may have to pay the maximum or penalty fares, TfL notes. Other problems surround receiving a call before tapping the reader, which requires re-authentication. TfL also advises users to pay with the same device for each TfL ride. Users
with an iPhone and an Apple Watch must beware of being charged twice.
apple’s slice
Speed is another issue for transit riders using any mobile phone- based payments—not just Apple Pay. Even when pre-authorized, smartphone contactless payments are somewhat slower than con- tactless cards, according to
The Guardian. For passengers that haven’t pre-authorized the payment, the process takes longer, leading to irate commu- ters and queues at the gates, the report said.
Will it Change the
Payments Landscape? Contactless payments have been available in the U.K. for many years, always with the promise of signifi- cant growth. Until recently, most
of these promises were empty. Four years ago, I made the predic- tion that TfL would be the tipping point for contactless payments by opening up its system to any NFC-enabled device. I’m happy to have been proven right. The U.K. now has 410,000 contactless terminals and 630,000 contactless journeys are made every day on the TfL network. That means 1 in every 10 contactless transactions in the U.K. is made on TfL.
As consumers embrace contact- less cards for transit, it’s driving behavioral changes in the wider use of contactless. Contactless cards have become the cards of choice for U.K. consumers. More than £2.5 billion (US$3.8 billion) was spent using contactless cards in the first half of 2015, new data from the UK Cards Association shows. Given this groundswell
of contactless payments activity, Apple Pay is entering the market at an opportune time.
In the past, prepaid issuers and program managers were reluctant to encourage contactless payments because of the low-value spend.
But enabling your cardholders to make contactless payments makes your card top of wallet for all spend, which will increase revenue.
The slow take-up of contactless in the U.K. also was due, in part, to poor user experiences and lack of training for cashiers. Mer- chants weren’t excited about it. The launch of Apple Pay is very different. Merchants are clamor- ing to be associated with Apple. They all want to be part of this exclusive club.
Yes, there have been some speed bumps in transit and international acceptance, and Apple faces competition from domestic wallets, with more rivals coming. But no matter how you feel about Apple Pay, if you’re in payments, you simply can’t ignore it.
Suresh Vaghjiani is executive vice president, card services, for Global Processing Services, which is a 2015 Paybefore Awards Europe One to Watch company. The former head of issuing at Optimal Payments PLC, Suresh also launched the first-ever contactless watch in the U.K. and first app-controlled NFC iPhone solution in Europe while at Kalixa Pay. He is based in the London office and may be reached at suresh@global processing.ae.
When Apple Pay launched in the U.S. in 2014, the Financial Times reported that Apple had convinced U.S. banks to let it keep 0.15 percent of each transaction. What U.K. banks are paying hasn’t been made public yet.
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