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Apple Pay hits the UK
The arrival of Apple Pay in the UK marks a key moment for growth in contactless payments.
Following months of anticipation, Apple Pay, Apple's mobile wallet service, has finally arrived in the UK. It is perhaps no surprise that the UK has been chosen as the first location outside the US to receive the new 'tap and pay' feature: Britain currently leads the way in Europe with contactless payments, with substantial growth expected in 2015, while the use of mobile devices for banking continues to rise. Naturally, the prospects for Apple Pay in the UK look favourable, as increasing iPhone penetration (iPhones account for 42.5% of British smartphone sales), consumer demand for a frictionless payments experience, and Apple's ability to define expectations will likely lead to significant uptake.
While for now only customers of Natwest, Royal Bank of Scotland, Nationwide, Santander, Ulster Bank and MBNA can use the service, several other major banks, such as Barclays and HSBC, have signalled their intention to support it. The majority of retailers that accept contactless payments will also support the new pay system.
However, it is only once the excitement and inevitable teething problems subside that the significance of Apple Pay's arrival will become clear. At the recent Payments Innovation Conference, there was much debate on the impact Apple's entry into the UK payments space will have, from the brand disintermediation banks could face in the payments process to the challenges facing competitors eager to follow in Apple's wake.
Yet perhaps the most significant impact for the payments sector will follow from Apple's ability to legitimise and build consumer confidence in 'tap and pay', providing fertile ground for rival service providers to come to market and encourage further innovation. Key to this trust-building process will be the capacity to dispel fears around the security of transactions, which Apple hopes its use of biometric verification through Touch ID, tokens and encryption keys will achieve. With both Samsung Pay and Google's revamped mobile wallet, Android Pay, on the horizon, mobile devices look set to be at the centre of the next surge in uptake of contactless payments.
