Matthew Knight in Retail Gazette: Apple Pay


With Apple about to launch its mobile payment service in the US, Matthew Knight, Head of Strategy & Innovation at global media agency Carat, explores whether the Cupertino-based company will be able to accelerate contactless payment adoption among consumers and potential opportunities for retailers.

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This month, Apple releases its Apple Pay service on its new iPhone 6 handsets in the US. The devices now include NFC technology, a short-range wireless communication system, similar to oyster cards and contactless payment cards, which allows consumers to pay for items directly with their phone, rather than a traditional chip and pin card.

Whilst contactless payment has been around for a number of years, retail adoption has been slow – but could the support of a big mobile player such as Apple have a significant impact upon the market? There’s mixed opinion.

By 2016 it is forecasted that over 50% of the UK’s card holders will own a contactless card, yet based upon a recent Datamonitor report, research found that 60.8% of payment card holders are still unaware or wary of using contactless, mostly due to security concerns – and Apple haven’t had the best track record in recent months, with hundreds of nude celebrity pictures being leaked by hackers who had breached Apple iCloud.

Secondly, iPhone’s market share worldwide is declining. The latest IDC data suggests that Apple with 12% of the market share may have reached its lowest quarterly volume for the year (2Q14), meanwhile Android with 84% of the market share continues to dominate the smartphone landscape. Yet Apple are a premium player, therefore it may well help adoption of contactless payment tech within certain audiences which disproportionately influence other audiences; and they’re the only business who have truly managed to motivate retailers to partner with them in adding support, which is no small success.

We’ve yet to see what data will be directly accessible to marketers, although a statement in the App Store guidelines states: “Apps using Apple Pay may only share user data acquired via Apple Pay with third parties when provided to facilitate or improve delivery of goods and services…”.

In any case, the more devices which support frictionless payment, the more likely consumers are to try it out and change their behaviours. Apple Pay gives consumers a genuine connected reason to get their phones out in store, and this creates opportunities for retailers to provide tailored experiences and targeted messaging in store, and then leveraging the new functionality around simplified in-app purchases to accelerate or drive impulse purchases.

Apple Pay doesn’t yet have a launch date in the UK, but rumours suggest it won’t be until 2015, giving retailers and brands in retail an opportunity to think about how mobile contactless payment could be leveraged to their benefit.

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