Will the UK be the first Apple Pay success story?

Last updated: 12 June 2015

At last, for the people of the UK, Apple Pay is about to arrive. As of July, Apple’s NFC-based payment system that allows payment with an iPhone or Apple Watch will be available in a variety of stores. The list is impressive, as it already includes big names such as McDonalds, Boots, Costa, Liberty,  Waitrose, M&S Simply Food, Pret, BP, Subway, Wagamama, Spar, KFC, Nando’s, New Look, Starbucks, Dune, Lidl, M&S, Post Office, JD Sports, Halifax and Natwest.

In total, it’ll be available at more than 250,000 locations in UK, which is considerably more than the number of merchants that were Apple Pay-ready for last year’s launch in the US. This got us thinking: will deployment in the UK be faster than in the US? For example, the infrastructure already in place could be a key factor for a speedy roll out. Here are three reasons why it will be faster, which we should bear in mind for the future.

  1. The prevalence of EMV in the UK – In the UK, EMV has already been deployed successfully on a grand scale, and it’s ploughed an easy-to-follow road for contactless payments. This presents a lower barrier to access in comparison to the US, where magnetic strip payment systems have been the norm.
  1. Interchange fees – fees per transaction for card issuers this side of the Atlantic are much lower, and are continuing to fall following action from the EU. While this might have delayed issuer negotiations on Apple Pay slightly, it means the deployment of Apple Pay in the UK will be more attractive than it was to merchants in the US, and therefore could be faster. And, as fees are lower in Europe, merchants for some time now have been moving towards contactless payments en masse – Apple is now embracing NFC at the same time, so Apple Pay has become a natural next step for merchants. The fees in the US on the other hand made this step more of a leap of faith for merchants.
  1. Infrastructure – a solid contactless payment infrastructure, and a population used to tapping to pay, is already in place in the UK. As Mark Barnett, President of MasterCard UK & Ireland said recently in an article from Tech Week Europe, the UK has “more than 10 contactless payments every second, and on Transport for London alone, commuters tap to pay over one million times a day.” Until Apple Pay launched in the US, there was a relatively narrow base of contactless terminals available, whereas in the UK there are plenty – as a result, deployment will involve a simple OTT for most merchants, rather than large scale POS installations.

So there you have it – we’re placing our bets on deployment in the UK being faster. In fact, we’re predicting that the number of users in the UK after six months will be comparable to the number of users the US had after a year. The UK should also have a better percentage of usage. Make sure you check back here at the end of the year to assess the accuracy of these predictions!

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