Apple Pay: What the leader's think (Part 2)

The industry has been looking at Apple Pay as a game changer.

The launch of Android Pay combined with a reasonable penetration of NFC terminals, in particular in London and major towns, are promising building blocks to see NFC mobile-enabled payments taking off. Banks have flocked to sign up and announce their support to Apple Pay both in the US and in the UK.

Nonetheless take up will be slow. This is due to a number of factors. Apple has just over 18% market share globally, based on IDC research, while Apple’s UK smartphone share is just under 40%, based on Statista research. eMarketer research states 55% of UK consumers have a smartphone, leading to the estimate that about 22% of the UK population are iPhone users. iPhone 6 owners have been keen to sign up to Apple Pay but the adoption of it must take into account the fact that the UK handset upgrade cycle is 24 months for the most part in UK contracts. Few consumers are willing to pay full price for the sake of being able to use Apple Pay and would rather wait to get the new phone as a contract upgrade.

So, even if we assumed to see a full switch to iPhone 6 by the Christmas season 2015, and we started to see Apple Pay volumes registering on transaction statistics, it is still likely that Apple Pay transaction volumes would be low and will take time to grow.

I would also consider the other UK mobile payment solutions including Barclays’ Pingit and ZAPP. Ultimately the mobile payment space is over-supplied with a significant number of wallets and interfaces competing in a market that I would expect to become pretty fragmented in the medium period.
Take off will happen but slowly and will represent a very, very small share of total transactions for the foreseeable future.