The changing face of payments

In some ways it's more straightforward in the UK than in the US.

It is difficult to get a full picture on what the commercial arrangements are going to be between card issuers, who are in effect going to be providing the issuing side of the process, and what the arrangements are with merchants. In the US there is a premium to be paid that Apple puts on top of the interchange rate that the issuers get.  It’s not clear if this will be the case in the UK yet.

Where Apple really wants to try and improve the consumer experience is with in-app purchases. The mobile payments process usually takes a number of screens, with Apple Pay it’s pretty much a single screen, using Touch ID and the approval goes through. Speed is so important – mobile users typically are on the go and don’t want to go through 3D Secure on their phone. Having that improved shopping experience should make Apple Pay successful in the UK.

Face-to-face, it is just an element of substitution, similar to cards, although early adopters will use it and tech-savvy people but the real benefit comes with the in-app site.

As retailers become more attuned to mobile and tablet payments and ready their shops to be truly omnichannel, the in-app process will become even more important.

Apple has changed the dynamics in other industries already and it has a real chance of taking some market share here but it will be a longer burn and will depend on how each individual consumer integrates their mobile into their lifestyle.  It’s unlikely to take the world by storm like iTunes did.


It’s likely that Apple will tie in loyalty programmes as it’s a very straightforward process for them to add on rewards. This would be the differentiator over low value contactless card payments. Apple already has a strong loyal following but it also has to find ways of getting people to choose Apple Pay.