EDITORIAL: Is Apple Pay apathy causing a payment strategy rethink?

using_applepay_mehThis editorial was first released on Monday 4th April. Contactless Intelligence Weekly News Review Editorial – Week 14, 2016:

Last week saw news that various financial institutions were gearing up for the ‘imminent’ arrival of  Android Pay in the UK as a beachhead for further European expansion. The mobile payment solution will also be joining the likes of Apple and Samsung, not to mention solutions from the likes of Barclaycard and even the releases of various superstores’ attempts to carve out a mobile checkout niche for themselves in one way or another (see the release of Tesco’s PayQwiq).

However, despite all of the hoopla and hype that has gone into these mobile payment platform releases, are people actually using them? And perhaps, more importantly, are these platforms expanding their reach within the payment environment to make up for lackluster results? Let’s be honest, in the first nine months since Apple Pay’s launch in the UK, there has been precisely zero information given out by Apple on its success (or lack thereof).

The only indication we have about Apple Pay’s popularity in the UK comes from Transport for London (TfL), which in January 2016 said it had recorded 3.2m journeys using “mobile devices” in the six months since Apple Pay launched. Assuming these are all Apple Pay (a safe assumption given iPhone is the only mobile device with the ability to make contactless payments), that indicates just 0.4% of the daily pay-as-you-go journeys on TfL used Apple Pay, or just 35,000 of the 13m trips made every day.

So is it fair to assume that Apple is looking to cast its net wider in looking for both, an increase of users for Apple Pay and opportunities for Apple Pay to be put to use?

Case in point – Apple’s announcement in the last few weeks that they are preparing to bring one-touch online shopping to the mobile Web later this year, enabling consumers with Safari browsers running on the consumer electronic group’s phones and tablets to use Apple Pay and TouchID to make a purchase. Apple has already introduced the one-touch feature to in-app purchases for iOS mobile apps, but the integration with Safari would extend the experience to conventional online shopping sites.

Apple will be competing directly with PayPal, whose One Touch payment system has experienced rapid adoption since it was first introduced ten months ago. The company says 18 million consumers have now opted-in globally, and that more than 50 percent of the Internet Retailer 500 in the US and more than a million merchants around the world have enabled the service. PayPal One Touch may be the most obvious success story, but exploiting the one-click shopping experience is also a major target for the card schemes and other Internet giants like Google and Amazon.

However, perhaps the problem is that iPhones are still relatively expensive, meaning that, unlike Android-based phones, the user level for Apple Pay could still be fairly small. That could, of course, change with the release of the iPhone SE and a starting price of £359, meaning that the SE is the cheapest iPhone in Apple’s lineup to come with Apple Pay, that was previously reserved for Apple’s iPhone 6 or 6s which start at £459.

Apple has also been more visible with their in-store marketing for Apple Pay. With stores such as Pret a Manger, McDonald’s and Marks & Spencer apparently embracing the payment solution by allowing promotions reminding iPhone users to try paying with Apple Pay.

To return to the headline, perhaps it’s not really apathy that is causing the Apple strategy expansion but a more realistic view of the number of iPhones versus Android-based phones out there. To some extent being the smaller, more successful, niche offering out there never bothered Apple before. However, to succeed in the payment market one of the key requirements is that of volume and customer access. Perhaps this is why we are now seeing Apple re-align their Apple Pay strategy into pastures new as they face up to the fact that sometimes to combat customer apathy you have to increase volume penetration.

A hard lesson for the like of Apple, no doubt.

Steve Atkins
Contactless Intelligence

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Categories: Apple Pay, Editorial

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