Apple Pay UK – The start of a payments revolution?

14th July 2015

When it was announced Apple Pay was to launch in the U.S. it was big news. Finally, Apple had joined the mobile payments party – a seemingly flagging revolution. As was to be expected, similar initiatives from Samsung and more recently Google (Android) soon followed – all in the U.S.

It’s no surprise – The U.S. is a huge, dominant market; Both Apple and Google are U.S. companies and the fact that card schemes such as Visa, Mastercard and Discover are all U.S. centric, allows for that most important close collaboration. All of which points to the U.S. being the perfect place to launch such a product.

Unfortunately however, when it comes to mobile payments, the U.S. is ill prepared to start a revolution. The required mobile payments infrastructure is limited to the major cities such as New York, Texas and California with the remaining parts of the country lagging behind and still struggling to catch up with EMV let alone contactless payments.

Added to this is the competition from the mobile carriers and the merchant community in the form of MCX, where we hear stories of merchants actually turning off what little contactless infrastructure there is, to block rival technologies (such as Apple Pay). All of which further underlines the problems facing mobile payments adoption in this advanced, yet still highly fragmented market.

Taking all these factors into account, it’s perhaps understandable why Apple Pay (U.S.) has only achieved moderate success. There have also been teething problems, cases of fraud around the card on-boarding process, not necessarily Apple weaknesses per-se, but hiccups that have certainly contributed to a less than enthusiastic adoption rate.

In June 2015, we learned that Apple Pay was coming to the UK in July, so should we expect anything different from the UK variant of the product other than a switch from U.S. dollars to GBP? I believe we should expect differences, and possibly significant ones at that. Here are a few of the reasons why:

  • The U.S. is a huge country, similar in size to Europe. The UK is a small but densely populated country with a large percentage of the population centered around London. During the working week, it is estimated that there are more than 10 million people in Greater London, which is around 15% of the entire UK population.
  • The UK has the highest penetration of contactless infrastructure in Europe. There are more than 410,000 contactless enabled terminals, including many tier 1 retailers found in almost every town and city in the UK – Boots, WH Smiths, The Post Office, Marks & Spencer, McDonalds, Pret a Manger, Eat, Costa, Caffe Nero, Starbucks and Subway to name a few. 
  • Almost all UK retail banks are now issuing contactless cards – Amex, Barclays, HSBC, Lloyds, RBS, Santander, Nationwide, Capital One and more – many have been doing so for several years and most UK consumers will be carrying contactless cards today. Visa claim the UK currently has 49.6 million contactless cards in circulation, a 37% increase in the 12 months leading up to March 2015.
  • In March 2015, British consumers spent in excess of €330 million using touch-to-pay technology.

The maturity of the UK contactless card and terminal market, and the high adoption rate of contactless by high street retailers, have all helped move the UK into the European top spot for contactless adoption (in terms of cards issued and terminals deployed). Importantly, UK consumers are familiar with tapping – they have the cards, they have the retail outlets.

However, there is one other, compelling reason why Apple Pay may have chosen the UK as their next port of call, and that’s Transport for London (TfL). Since they made the decision to include open loop contactless payments alongside Oyster, over 100 million contactless journeys have been made. TfL have made contactless payments a mass market in London, moving it from a niche technology to an everyday essential.

Contactless payments are becoming a habit in the UK and that could be good news for mobile payments. It’s no coincidence that Apple have worked closely to ensure Apple Pay will work at the TfL gates, after all TfL are the largest merchant in the UK, and this might just be the tipping point.

I’ll stick my neck out here in predicting Brits will embrace Apple Pay and it will prove much more popular than its U.S. cousin. It could well be the start of a revolution…


Andy Ramsden, VP Sales & Business Development - EMEA

Andy Ramsden, Product Director, Payments, Proxama