So what will Apple do?
Apple Pay, which has already launched in the US with American Express, MasterCard and Visa, will come to the UK and the rest of Europe in 2015. Visa will work with Apple to roll out Apple Pay through 1.5 million Visa contactless payment terminals found in stores across Europe. The large partnership between two behemoths will be highly secure and appeal to hundreds of millions of existing Apple and Visa customers. It’s also a sign that Apple isn’t entering this space half-heartedly.
Figures from Visa Europe further support this. Across Europe there are 90m contactless cards in circulation. The average transaction using contactless is £7.45 – showing that UK consumers are warming to the new form of payment, which naturally increases adoption rates amongst retailers, large and small. It’s a growing market with more and more transactions, as Visa reports 20m contactless purchases in the whole of May 2014 in the UK, with a total value of £126.7 million.
Given Apple’s significant market share, it is inevitable that its payment solution will only further enable and encourage people to use contactless payment solutions even more. The system is not only easy to use, but also given its on a device that so many people use already, Apple Pay immediately has a head start in the race against its rivals – particularly a new starter such as CurrentC.
However, there is still a need for Visa to ensure customers are educated on the opportunities because too often, such as with Google Wallet, market penetration is low. This can be for a variety of reasons including confusion, security fears or lack of information.
There is also no sign as to whether CurrentC or a similar platform will rise up to take on Apple this side of the Atlantic.
Who will win?
In reality, retailers are not well positioned to take on a technology business. The war on mobile payments is unlikely to be won by a retailer, which makes CurrentC’s launch so surprising.
The infrastructure needs to change for retailers to cope with these differences at purchase point. Consumers are looking for easy, quick and safe payment solutions rather than contactless cards, which we are more familiar with. The technology in Apple Pay is going to be the tipping point in the UK (and Europe) for mobile payments, where most current account holders already own touch to pay cards. This dated QR code style that CurrentC has developed is unlikely to revolutionise the way consumers shop. While MCX’s group represents roughly 50 retail partners processing nearly $1 trillion in annual sales, it is still going up against Apple Pay’s exceedingly easy system and ultimately the power lies with consumers who get to decide how they pay.
Add to this the steadily rising brood of retailers that Apple is gathering in its corner (it claims to have over 220,000 stores on board in the US alone) – such as McDonald’s, Nike, Subway and Whole Foods just to name a few – and it would appear CurrentC might just be fighting a losing battle. CurrentC’s launch also got off to a pretty rocky start; the service was reportedly hacked before it even went live. This is a big concern, and further supports the theory that this offering may be rushed out a bit too fast.
Overall, the UK is well advanced when it comes to contactless payment technologies. Businesses, such as Pret a Manger and Tesco, are already accepting payments through NFC. While there have been many failed attempts and no one has taken control of the market, there is a great opportunity for UK companies to take advantage of such innovations in mobile payments.
However, UK retailers would do well to keep all eyes on their core business and deliver a payment experience that their customers want instead of trying to shut down customer experience facilitators such as Google and Apple. Ultimately, this is about a data ownership war and controlling mobile payments is not the only way to win.Emma Crowe is the senior VP of client strategy at mobile marketing agency Somo.
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