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15 AUGUST 2016
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Monday, 13 July 2015 10:38
Apple Pay launches in UK tomorrow
      * Loyalty an important element of renamed wallet

              * What it costs the banks to take part

                      * Locations and acceptance explained
                          The UK Cards Association has confirmed that , tomorrow, Tuesday, July 14 is indeed the day when Apple Pay comes to the UK, following the leaking of documents from Waitrose that gave us all an early notification.

                          The interesting question now is what difference will it make?

                          There are plenty of analysts predicting that following on from the explosive growth of contactless payments seen in the last 18 months (mostly due to increased Oyster transit use), the jury is still out over whether people will bother to pay with mobile when they can use a payment card.

                          Much rests on this major NFC launch and the banks seem prepared to pay dear for the privilege of allowing Apple Pay into their jealously guarded payments business.

                          In order to save NFC from oblivion, the payments industry needed an influential player to adopt the payment method, and in this way, put into the background, the literally hundreds of new entrants keen to become the default payment method. In the US, it costs card issuers 0.15 percent of each purchase which will be paid to Apple – the first time banks have paid anyone for an electronic payment. This equates to 15 cents out of a $100 purchase. No confirmation of the fees for the UK have been received, but it would be surprising if they were much different from the US 15 basis points.

                          As one commentator put it: "The banks are paying hard cash for the privilege of being involved: 15 cents of a $100 purchase will go to the iPhone maker. That is an unprecedented deal, giving Apple a share of the payments' economics that rivals such as Google do not get for their services. Whether Google, with Android Pay, and Samsung with Samsung Pay will be as tough negotiators is another matter.
                          But current mobile developments are not just about payments. A big carrot for both banks and retailers is the amount of information that can be gained through mobile payments, especially if this is used in the context of where the user is situated. Add to this incentives such as loyalty programmes, and it doesn't take an economist to work out the drivers to the investment. In fact it all returns to that original mobile holy grail, that of replacing the physical wallet.

                          Apple Pay has already announced the rebranding of its 'Passbook' app to 'Apple Wallet'. This is a big statement of intent from Apple especially as this will presumably then hold all the cards normally slotted into our pockets or bags. Passbook has been in the doldrums since it launched, so this is a very satisfying development.

                          Credit and debit cards, loyalty cards, plane tickets, boarding cards, Oyster, vouchers, coupons .... there is a very big list of possibilities if Apple, Samsung and the others persuade us to take part by entrusting our favourite cards to their mobile filing cabinets.

                          When customers with a reward card make a mobile payment, Apple Pay will automatically present their loyalty card to the merchant’s POS terminals to ensure they always receive their rewards, Bailey added.

                          Apple Watch users will also be able to access their store and loyalty cards when using Apple Pay, VP of technology Kevin Lynch revealed during the keynote. It is unclear yet whether merchants will have to pay a fee to Apple to have their loyalty cards in the Apple Wallet.

                          Paying by Apple
                          Paying by Apple should be easy, but it will still require an authentication by the user, using Touch ID. It is possible to pay for items over the contactless limit of £20 using Apple phones, but only with an addition authentication by the user.

                          Apply Pay is pushing its high level of security as a big plus point for users, and says that it will soon be bringing all the benefits of protecting personal information, transaction data, and credit and debit card information with the industry-leading security Apple Pay brings. When adding a credit or debit card, the actual card numbers are not stored on the device, nor on Apple servers. Instead, a unique Device Account Number is assigned, encrypted and securely stored in the Secure Element on your device, and each transaction is authorized with a one-time unique dynamic security code.

                          London Apple Pay launch in detail

                          Jennifer Bailey, VP of internet services at Apple, confirmed that the Apple Pay London launch will be supported by HSBC, NatWest, RBS and Santander, with more to join in the autumn.

                          At launch, Apple Pay will be available in 250,000 locations, which Apple said is more than in the US at initial launch, including popular retailers such as Boots, Costa Coffee, Waitrose and Marks & Spencer. It will also work with public transport in London.

                          Aside from the UK rollout, other Apple Pay updates were also unveiled, including the evolution of the Passbook app to become Wallet in OS9. In line with this, it will gain support for store and loyalty cards – the company is positioning Wallet as “one place for all your credit and debit cards, reward cards, boarding passes, tickets and more”.

                          Acceptance in more detail

                          Apple Pay will support UK credit and debit cards from American Express, MasterCard and Visa Europe, Other major issuing banks will follow by this fall, including Bank of Scotland, Coutts, Halifax, Lloyds Bank, MBNA, M&S Bank and TSB Bank.

                          Starting in July, iPhone 6, iPhone 6 Plus and Apple Watch users will be able to make purchases anywhere contactless payments are accepted. In addition to the 39 Apple Stores in the UK, leading locations for everyday shopping that will accept Apple Pay include Boots UK, BP, Costa Coffee, Dune, JD Sports, KFC UK & Ireland, Liberty, LIDL, Marks & Spencer (M&S), McDonald’s UK, Nando’s, New Look, Post Office, Pret A Manger, SPAR, Starbucks, SUBWAY stores, Wagamama and Waitrose. Transport for London will also accept Apple Pay, so you can use your iPhone or Apple Watch to pay for your travel or daily commute.

                          In apps, checkout is simple and there is no need to manually fill out lengthy account forms or repeatedly type in shipping and billing information. Apps that will accept Apple Pay in the UK include Addison Lee, Airbnb, Argos,, British Airways, Domino’s, easyJet, Hailo, HotelTonight, hungryhouse, JD Sports, Just Eat,, Miss Selfridge, Ocado, Stubhub,, Top 10, Topshop, Uncover, Vueling, YPlan, Zalando and Zara, among others. When paying for goods and services within apps, Apple Pay is compatible with iPhone 6, iPhone 6 Plus, iPad Air® 2 and iPad mini™ 3.

                          US acceptance
                          2,500 banks and dozens of merchants support Apple Pay, and app developers are reporting a 2X increase in checkout rates when they've added Apple Pay support to their apps. But it's about to get much better:

                          This fall, 50+ million Discover card members will get finally access to Apple Pay.

                          Apple will surpass one million locations accepting Apple Pay next month — and more popular retailers like Trader Joe's, Baskin Robbins, and JCPenney's are joining soon.

                          Apple Pay appears to be giving mobile payments a much-needed boost in the US. In January, Apple said Apple Pay made up more than $2 out of every $3 spent on purchases using contactless payments. Tim Cook, CEO of Apple has said that "2015 will be the year of Apple Pay."

                          Also highlighted at the recent Apple Worldwide developer conference was the launch of a new reader from Square which will enable local and small businesses to accept Apple Pay.

                          In the US market, the company will pass one million locations accepting Apple Pay next month, the executive said.
                          And the addition of card issuer Discover to the roster means that 98 per cent of the US credit card purchase volume will be supported by Apple Pay.

                          Pinterest joint venture

                          Apple and Pinterest are launching buyable pins, where you can buy items from thousands of stores like Neiman Marcus

and Macy's right from within the Pinterest app using Apple Pay. This feature will be an iOS exclusive

                          Apple versus Android
                          Apple phones now make up over 30% (check) of handsets, so there is plenty of room for growth outside of the Apple community. Spread the picture wide to encompass the whole world, and the challenge is to bring in all those using phones that are less than smart.

                          But returning to London and other more developed markets, all eyes will be on Apple.

                          Worldwide Developer Conference

                          Apple used its Worldwide Developer Conference to detail planned updates to its iOS platform, to give native app support for Apple Watch, and to debut of the company’s hotly-anticipated new music service. Many have suggested that Apple, through iTunes and its App Store, already has the infrastructure for online payments, which is powered substantially by developer initiatives.

                          “The rate of growth and the momentum is absolutely staggering”, he said, sharing that the store has now passed the 100 billion app download mark.

                          “We’ve now paid out $30 billion to developers. The App Store continues to be the most profitable app marketplace on the market,” he said.

                          Sales of Apple watches has slowed considerably, but with developers gaining access hardware features, including the microphone and speaker, taptic engine, and digital crown navigation tool plus access to hardware sensors and the ability to play video, watches are expected to remain an interesting development to monitor, not least for payments.
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