The Post Office, Costa, and Wagamama were among the plethora of retailers announced as partners for Apple Pay’s imminent UK launch. All have decried it a “natural” step as they ramp up their mobile payment offering, despite some resistance from US retailers when it first launched in the country last year.
US retailers have reportedly been slow to embrace it due to insufficient customer demand, a lack of access to data generated by transactions and the cost of technology to facilitate the payments. Big-name brands including Walmart have boycotted Apple Pay entirely, instead uniting to create their own retailer-led mobile payment consortium CurrentC.
However, UK retailers have shrugged off concerns about Apple Pay potentially walling off their data capture capabilities.
Mobile payments are set to boom in the UK, according to a recent report by Visa, which estimated that £1.2bn will be made per week via the method by 2020 as six in ten Britons use their mobile devices for payments.
Post Office chief marketing officer Pete Markey described Apple’s entry onto the UK mobile payments scene as “game-changing”.
“If you look at everything Apple has gone into in its history, is has done it well and executed faultlessly. This has the opportunity to be game-changing in the mobile market by virtue of the brand doing it and the way they’re doing it. This isn’t just another ‘me-too’,” he said.
Wagamama has offered mobile payment solutions for a number of years. Marketing director Alex Meyer told The Drum that adoption has been positive, with some of its restaurants, particularly in London, seeing up to a quarter of transactions made using mobile payment options.
“We expect that to continue to grow as people start becoming aware of it,” he added.
The growing number of iPhone users in the UK suggests driving awareness and adoption will not be an issue. Sales of the iPhone 6 saw Apple increase its share of the UK smartphone market to a record 42.5 per cent in November, according to figures from Kantar Worldpanel ComTech.
Lack of access to data however, remains a sticking point. All of the retailers that spoke to The Drum said improving the in-store customer experience was the key factor in introducing the technology as opposed to gathering data to serve up a more personalised offering.
It is not clear how much retailers will be able to gather. With regular payments, when a credit card is swiped the retailer gets the name and card number which can be combined with publicly available data such as address, phone and email, to create targeted promotions.
With Apple Pay however, when a customer adds a credit or debit card to Apple Pay, 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 the device and each transaction is authorised with a one-time unique dynamic security code.
Regardless, retailers like Costa remain hopeful that Apple will develop solutions to help tailor the offering.
Jon Fisher, head of mobile and loyalty at Costa explained: “We launched our mobile loyalty app last year which customers scan in-store. There is probably a role for mobile payments to be integrated into that in the future and we’re looking at that.
"The product that Apple has will really help to provide a simple solution around in-app payments and payments in store. That’s potentially where the market is going to head, so we need to have all options on the table."
Unlike Costa and Wagamama, this will be the Post Office’s first foray into mobile payments, and the benefits of piggybacking on the brand power of Apple’s is clear. Markey said the biggest draw for him was being a partner from day one.
“The exciting thing about Apple is they don’t stand still, they are constantly evolving the offering. So I can see a lot more doors opening when Apple are involved and innovating.”