Opinion

British businesses respond to UK launch of disruptive retail channel Apple Pay

16 min read

14 July 2015

Former deputy editor

After being announced earlier in summer, Apple Pay, the new mobile payments channel from Apple, has officially launched in the UK. As the face of British retail looks set to change forever, business execs from across the country, and those with overseas experience, have offered Real Business their thoughts, some good and some bad, on the arrival of the new technology.

It was revealed in June that Apple Pay would soon launch in the UK and it finally has. It will receive a large scale push from the off as Starbucks, Nando’s, Boots, McDonald’s and Pret are among just some of the large companies to accept the new form of mobile payments from Apple.

However, the tech, which allows payments in-store and in-app using a combination of fingerprint scans and contactless transactions, is only available to users of the iPhone 6 or Apple Watch – limiting the number of people who can adopt the service.

As such, Barclaycard has set out to capitalise on those consumers who may feel left out, having launched the bPay wearable payment devices in July, which arrived as a wristband, keyring and sticker, to provide contactless payments to the masses.

With Britain’s retail sector preparing to be overhauled significantly in the coming weeks and months, senior business executives from the UK have provided their thoughts and feelings on the Apple Pay launch to Real Business.

Andreas Pouros, COO and co-founder at digital marketing company Greenlight, said:
“How we pay is fundamentally changing. Consumers are demanding faster, more convenient ways to pay on and offline. While Apple Pay will accelerate that change, it is little more than a footnote in the grand scheme of things. If payments are to become truly ‘contactless’ the mobile barrier must be removed entirely.

“Implanted microchips offer the most elegant solution, but remain too ‘sci-fi’ for most people. Biometric payments are more likely to gain mass acceptance in the short term and we are already seeing banks experiment with facial, fingerprint, and finger vein recognition. The question is will retailers and consumers be as fast to embrace these new ways to pay?”

Clive Schlee, CEO of Pret A Manger, said:
“We’re looking forward to customers trying out Apple Pay for the first time in one of our shops. We were one of the first UK retailers to offer contactless payment and today half of all card payments at Pret are contactless. We’re delighted to make paying even more convenient for many with the introduction of Apple Pay, including payments over £20 – an advantage if you’re doing the office lunch run.”

James Davies, head of channel partnerships EMEA at location marketplace xAd, said:
“The launch of Apple Pay means mcommerce will inevitably increase because the service works in two situations, in-store and in-app. Apple Pay makes the latter much easier by reducing the number of hoops a person has to jump through to order a product on their mobile device especially when out and about. However, the in-store element is very significant. According to Deloitte, 88 per cent of UK retail transactions still happen in-store and Apple wants a slice of that action.

“As mobile devices continue to play an increasingly important role in people’s shopping habits, particularly in the context of purchases in bricks and mortar stores, manufactures and retailers need to find ways to take advantage of this. Apple Pay has the potential to bring some new insights into shopper behaviour which, when combined with techniques such as location targeted marketing, could result in more personalised and relevant offers and promotions for consumers.”

Read more on Apple Pay:

Dan Wagner, ecommerce veteran and CEO of Powa Technologies, said:
“The platform has some constraints as it is only available to iPhone 6 and Apple Watch users and it relies on Near Field Communication (NFC) technology. What shoppers really want is a ubiquitous solution which allows them to buy products anywhere, at anytime, from a range of mediums, using any digital device.

“The decision to only use NFC also drastically reduces the scope of its usage for retailers as they have to support NFC terminals. Apple Pay doesn’t support online shopping either – once again limiting what consumers can use it for.

“Despite Apple being an instantly recognisable brand, Apple Pay’s limitations mean it can only be seen as just another way to pay for things. To stand out in an already crowded market, new entrants should provide more than just a payments service. Many retailers don’t see a benefit in Apple Pay because they want a solution that will help them create an omni-channel sales offering, engage better with their customers and understand their shopping habits.”

Tom Reaney, Magic Roundabout/Burger Bear Tom, said: 
“A week before we started using iZettle’s contactless readers the queues at the bars were five people deep, the week after it was a steady flow. To compete with bigger businesses it is important that SMEs and sole traders can accept all payment types and move with innovation – so accepting Apple Pay is going to be vital.”

Jason Richelson, CEO and founder of Shopkeep, said:
“Predicted consumer adoption rates will undoubtedly dominate headlines following the UK launch of Apple Pay today, but it’s on the other side of the counter where we see the really interesting story. In research carried out by ShopKeep, the vast majority of smaller consumer-facing businesses with 1-50 employees are positive about Apple Pay, but don’t believe it will have a material impact on how they operate.

“Our experience in the US says this thinking is flawed. Business owners in the US that have been quick to embrace mobile payments are growing three times faster than the national average, and going out of business much less often (five per cent fail within one year vs the 25 per cent national average).

“There are several factors that lead us to predict consumer adoption rates that dramatically outpace the US precedent: the early adoption of Chip and PIN; the comparative success of contactless cards; the fact that the UK now spends more on card than cash; and the decision by TfL to accept this form of payment on London’s public transportation.

“People will expect cashless transactions wherever they go and if smaller business in particular want to prosper, they must embrace the technology. These systems have become readily available and inexpensive over the last few years and implementing them will assist in delivering an improved customer experience. Put it this way, any business that wants to exist in the future has to prepare for it.”

Continue reading on the next page to hear from App Annie, Westminster Business School and more for the impact Apple Pay will have on banking and why it will outshine bPay, while PayPal explains its “best kept secret”.

Danielle Levitas, SVP research & analysis, App Annie, said:
“The launch of Apple Pay has the potential to shake up the banking and payments industries. Compared to the rest of Europe, the UK is a leader in mobile banking. In Q1 2015 downloads of the top ten retail banking apps in the United Kingdom were almost twice as high as those in France and three times as high as Germany. This success and proliferation in the UK shows there is an appetite for change in how people pay for goods and the increasingly important role of mobile.

“Apple is renowned for streamlining and popularising concepts, just think of its impact on MP3 players, digital music and media, smartphones and mobile apps. Although Apple Pay is not the first of its kind, the company’s reach and ability to evanglise is central to driving mobile payments adoption. 

“Apple doesn’t need to have a monopoly in payments to drive change in consumer behaviour and retailer POS systems. Delivering a best in class service that is widely promoted, Apple has the ability to turn another sector on its head.”

Peter Honegger, Newcomer Wines, said:
“We have been using iZettle’s contactless reader for the last couple of weeks and it really has helped make the whole payment process quicker and more efficient for our customers. We have always been open to innovative ideas that help to support our retail experience so we are excited to accept Apple Pay as a wine merchant in the UK.”

Read more on contactless payments:

Felicity Hardley, senior lecturer, Westminster Business School, said:
“Apple Pay might become the preferred form of contactless payments for consumers before long. Today’s launch of Apple Pay could dramatically accelerate the use on contactless payments by consumers and could increase sales of iPhones and the Apple Watch.

“A significant number of consumers already have the technology to utilise Apple Pay which means they can ‘try it out’ with relative ease and no additional expense, unlike the new Barclaycard wearable contactless payment devices.

“Consumers are increasingly comfortable with contactless payment methods due to being able to use debit or credit cards on public transport and in many retail outlets already. This takes out some of the fear factor in this new payment method. The fact that Apple already has so many major retailers signed up is the final signal to many consumers that this payment method should be safe.”

Dave Hobday, UK managing director of Worldpay, said:
“Apple Pay will revolutionise the way we shop, helping to create the UK’s first ‘cashless generation’ for whom paying with cash is as alien as using a landline or renting a video. Young people have always been early adopters and will be quick to favour businesses who offer the convenience and flexibility of contactless technology. Those that don’t will miss out to their more savvy rivals.”

Aunkur Arya, SVP and GM, PayPal-owned Braintree, said:
“Merchants and developers in the UK can now easily add Apple Pay to their checkout flow in addition to PayPal, credit cards, and debit cards. At Braintree, we’re continuously expanding our platform to enable merchants to deliver the best commerce experiences.

“Today, we are enabling UK and global merchants such as hungryhouse, Just Park, YPlan, Bar Pass, Top10, Bizzby, Mr & Mrs Smith, StubHub, and HotelTonight to be some of the first to accept Apple Pay in the UK.

“PayPal has long been a pioneer of mobile payments. Our founders had the idea of letting people beam money to each other via mobile devices. That vision has stood the test of time, and last year we handled $46bn in mobile payments. Every day, millions of people click on the famous PayPal button when shopping on their favourite websites. Our best kept secret is the fact we are the leading open payments platform for businesses. 

“PayPal will soon enable businesses of all sizes to accept Apple Pay anytime, anywhere with the latest version of our PayPal Here card reader [which] will also accept contactless cards and traditional Chip & PIN cards.

Emma Crowe, chief of client strategy, Somo, said: 
“Chip and PIN payment has been in the UK since 2006 and contactless payment since 2008. The UK is familiar with paying by waving at a terminal, and contactless spending tripled last year to £2.3bn. Therefore, Apple is entering a market that’s ripe for Apple Pay adoption. 

“However, competition will still be fierce. The banking giant, Barclays, is preparing to take Apple head on with their suite of contactless payment tools – a sticker, a key fob and a wristband. 

“I’m certain we will see millions of consumers create Apple Pay accounts as soon as they can, curious to test it out. Contactless payment terminals are already in place, so for retailers, there’s very little, if any additional hardware needed to utilise Apple Pay. Although, they will need to look at their entire customer journey to ensure it is seamless and consistent across every touch point.”