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Nov 16, 2015

Dave Howell examines the pros and cons of Apple Pay

According to the latest figures from trade body The UK Cards Association, over 70 million contactless payment cards have been issued to consumers. Last August alone £633 million was spent using this technology. Previously £20, the limit per transaction was increased to £30 in September 2015.

Graham Peacop, CEO of The UK Cards Association, says contactless payments are fast, easy and secure.

Huge rise
“With more contactless cards in wallets than ever before and a growing number of retailers accepting contactless payments, we have seen a huge rise in the number of payments being made,” he explains.

“The growth in contactless payments shows people want to use contactless cards and increasing the limit gives customers even more opportunities to pay in this way.”

Apple Pay, a new contactless payment system from the manufacturer of the iPhone, was launched in the UK on July 14. 

Sports retailers that can accept contactless payments can also accept payment via Apple Pay, which can only be used by owners of an iPhone 6 or 6s and the Apple Watch when paired with an iPhone 5 or above.

Apple has successfully utilised its mobile payment and digital wallet service to drive sales of its latest iPhone, the company reporting that it sold 13 million during their first weekend of availability.

The iPhone has become one of the most coveted consumer electronics products in history. However, one of the issues that’s been raised about Apple Pay is the lack of customer data a retailer operating the system is able to obtain.

When using traditional debit, credit and loyalty cards, retailers have been able to collect significant amounts of data about their customers, which feeds back into every aspect of their online and offline proposition. With Apple Pay, this data isn’t fed directly to retailers.

Security concerns
Another issue is consumers’ concern about how secure contactless payment systems are. With cases of data theft and hacking reported regularly - Apple itself has had security issues with its iCloud storage service - convincing a sceptical public that these systems are safe will be a slow process.

Security appears to be adequate with Apple Pay, as it uses tokenization. This means it doesn’t store card numbers on the user’s phone and, if stolen, can be remotely wiped.

Many consumers appear to be adopting contactless payment systems - Android Pay and Samsung Pay are also available - so supporting them in-store seems worthy of consideration. But look closely at the cost to determine its affordability.

Kevin Jenkins, managing director UK & Ireland of Visa Europe, says: “Contactless is becoming the new normal as everyday Britons embrace the speed, convenience and safety of touch-to-pay technology.

“We’ve seen unprecedented growth in this area, with the number of Visa contactless transactions more than trebling in the past year in the UK.”

Contactless payment will continue to grow in popularity and populate new technologies. All of the major issuing banks and credit card companies have experimented with stickers for smartphones, with some issuing bracelets and even key fobs capable of making contactless payments.

Ahead of the curve
Developing your support of contactless payments now - or at least starting the conversation with your bank - will ensure you’re ahead of the payment curve. The contactless payment environment is fast developing, which can be confusing, but what you can’t afford to do is wait. Adopting contactless payment technologies now will ensure your store stays relevant to its customers.

It’s too early to tell whether Apple Pay will transform the contactless payment space, but you should be ready to accept this payment method, which will result in an in-store evolution in how consumers pay for goods and services.


In numbers

• 89 million
The number of contactless transactions made in August 2015.

• 277,743
bank-owned terminals are available in the UK, where consumers can make a contactless transaction.

• 1 million
The number of Apple Pay activations during the first three days after its launch.

• 13 million
The amount of iPhone 6 and 6s units sold during their first weekend of availability.

• 42%
Apple’s share of the UK smartphone market.

Sources: The UK Cards Association, Apple Corp and Kantar Worldpanel ComTech.

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