Is Apple Pay to launch in Europe this summer?
It would appear that we have reached some form of milestone in the UK. Last weeks announcement by the UK’s Payments Council that the total number of cash payments made by consumers, businesses and financial organisations in the UK fell to 48% last year (from 52% in 2013) has created a small fission of expectation amongst the contactless payment industry. Change is coming…
Fundamentally, this is the first time that ‘non-cash’ payments have exceeded those made with cash, reflecting, says the Payment Council, the steady trend to use automated payment methods and debit cards rather than pay by notes and coins. However, cash remains the most popular payment method by volume, followed by the debit card, which accounted for 24% of all payments last year.
The Payments Council is quick to point out that ‘despite the shift, cash remains the most popular way to pay among consumers, who used it for more than half (52%) of all their transactions in 2014. The current forecast is that this figure will drop below 50% next year (2016), but there is no prediction for cash to disappear.’ I would not really expect cash to vanish into the ether, but the fact that we are seeing parity between cash and cashless does speak for a trend developing in which the acceptance of cashless transactions is more prevalent.
Indeed, the environment for cashless transactions is not simply confined to to the UK, or to either cards or on-line payments. Last week, Auriemma Consulting Group (ACG) revealed in their bi-monthly Apple Pay Tracker, that nearly half (46%) of US iPhone 6 owners have now successfully used Apple Pay, up from 42% two months ago, and 63% of those are using the mobile payments service on a weekly basis.
The research, based on a survey of 500 iPhone 6 owners in the US, finds that 67% of those that have used Apple Pay in-store are now migrating towards merchants that accept the service and 51% say that they are using other payment methods, such as cash, less often since they began using Apple Pay. However, 45% of respondents have reported experiencing issues while setting up Apple Pay and the main complaint for the service is the lack of retailers that accept it.
Marianne Berry, managing director of ACG’s Payment Insights practice commented, “Mobile payments still comprise only a small fraction of overall payments volume. Apple Pay is the first service to garner double-digit numbers of users. As the upgrade cycle gives more consumers access to Apple Pay, and Android Pay comes to market, the long-awaited transformation of the payments industry may finally have begun. It will be interesting to see how US adoption patterns compare to those in the UK and in Canada — markets with higher penetration of NFC and contactless cards — when Apple Pay is rolled out there.”
Which could be sooner that expected if the ‘slip’ by a Belgium bank on Twitter last week is anything to go by.
Speculation is already rife that Apple Pay could be entering Europe some time after the Worldwide Developers Conference scheduled for June 8. However, Belgium-based KBC Bank may have have inadvertently disclosed Apple’s plans. A customer of the Belgium-based KBC Bank tweeted asking the bank if Apple Pay is soon coming to the network, since the bank recently added NFC support to its credit and debit card network. The Belgian bank’s reply to the tweet (when twitter translated) was: “This will be possible from this summer. Have a nice day.” Following the tweet of Apple Pay coming to Belgium this summer, KBC Bank almost instantly tweeted a rectified statement which read “Apple Pay Rectification: KBC is constantly looking for new mobile solutions. Apple Pay is currently not yet in scope. Our apologies.”
Although it is possible that it might have been an accident on the bank’s part, I would say we should expect Apple Pay in Europe this summer. Starting in Belgium perhaps? Apple is continuing its efforts to establish Apple Pay in the US and is expanding it to other countries; there has been news in the recent past of the company being in talks with banks and financial institutions in Ireland as well as Canada. The company is likely to be bracing itself for a rival payment service about to be launched by its rival, Samsung. Samsung Pay is expected to be launched in South Korea and the US this summer, with a European release reportedly scheduled for later this year.
Not everyone is so gung-ho, of course. Payments specialist CMSpi has revealed in a survey that consumer enthusiasm for mobile payments has yet to be matched at the merchant level in the UK. In its annual ‘Payments Insights’ report, the company revealed that less than 50% of merchants in the UK have explored mobile payment solutions. Merchants cited security, speed of processing and cost as the main reasons for not exploring options in this sector, while the most likely payments solutions to be deployed are contactless and Point-to-Point Encryption (P2PE).
Brendan Doyle, CEO of CMSpi, said: “Despite the hype brought about by emerging payment types such as Apple Pay and Zapp, we aren’t seeing this play out in increased merchant adoption. “The report revealed wariness when it comes to new solutions – with merchants considering implementing P2PE and contactless only now despite their five-year availability. It’s our opinion that even a mobile payment solution that is secure, cost efficient and fast will take time to gain critical mass.”
That may be, however, with Europe and especially the UK now primed for alternative payment solutions, merchants may have little choice in the matter if consumers demand such a payment option. After all, Zapp has gone on record saying that 21 million British consumers will switch banks to access mobile payments, 33% of these within a year. 44% of consumers plan to switch accounts if their current bank was unable to offer mobile payments and had no plans to do so. Consumers, revealed the Zapp survey report, say their mobile will become their preferred method of payment before the end of the decade for all kinds of purchases, including: sandwiches (51%); car fuel (52%); and travel tickets (57%). Almost half plan to use their mobile to pay for electronic products and one in five (20%) even say they would buy a house using a mobile payment.
Peter Keenan, CEO of Zapp said of the findings, “The success of early forms of mobile payment and the buzz around forthcoming launches of mass market initiatives has whetted consumers’ appetites. Anticipation levels are running high and our research suggests banks and retailers stand to gain significant competitive advantage from offering and accepting mobile payments early. I’m confident 2015 will prove a tipping point, as simple, secure mobile payments like Zapp become a reality for millions of British consumers.”
I for one am really looking forward to the release of both Samsung’s and Apple’s payment solutions in Europe. I feel that the tidal wave of change could really be here. And all we have to do is wait a few more months.
Oh, the anticipation…
Steve Atkins
Contactless Intelligence
