Payments Industry –2015 Highlights and 2016 Trends (Part 1)
It’s the season when people look back over the year just passed.
It’s the season when people look back over the year just passed – the good and the bad – and also start thinking ahead to what next year holds for them: their hopes, expectations and fears. The retail payments industry in the UK has similarly seen a year of highs and lows and the industry can look forward with hope and high expectations – if not a little fear – to 2016.
Firstly, the highs of 2015 – it was all about xPay: after a year or so of hype, Apple Pay finally launched in the UK on 14 July, to a mixed response. While Apple “fanboys” and “fangirls” were eager to embrace this “new way to pay”, some of the UK’s leading issuers – HSBC, Lloyds Bank, Halifax, Bank of Scotland and TSB – didn’t queue to join up on Day One. Nonetheless, HSBC and First Direct were only a little late, announcing the launch of their support for the mobile payment product on 28 July, with Lloyds and HBOS joining on 28 September, and TSB on 17 November. The stand-out omission is Barclays who have announced their intention to join but who so far have been focused on promoting their bPay wearables product instead.
And the verdict? Statistics are hard to come by but feedback so far has been broadly positive, with 51% of Apple Pay users who were surveyed saying they are extremely satisfied with the service and 40% of those who have an Apple device confirming that they have used Apple Pay to pay for goods and services. Contrast this, however, with the 75% who have yet to see Apple Pay pay points or symbols and it is clear that overall customer awareness of the product still has a long way to go. Generally, the news is good for Apple with Apple Pay performing well in most environments, the London Underground being a notable exception, where commuters are sometimes frustrated by having to wait while an “Apple Payer” tries to use his iPhone or Apple Watch to negotiate his entry to the Tube system.
What? I hear you say. Apple Watch? Yes, the Apple Watch debuted on 10 April with limited stock available soon after. When Apple Pay was launched in July, watch-based payments became a reality for Apple Watch owners, and independent research published in August by Wristly revealed that 80% of Apple Watch owners had used Apple Pay to pay for goods and services.
While these statistics are impressive, it must be noted that even a large percentage of Apple Watch and iPhone 6 “Apple Payers” still only represents a very small number of consumers. The payment system may never reach the same level of ubiquity as contactless cards, even if over time the majority of iPhones in the UK market eventually become Apple Pay-compatible, so should we be making such a fuss about it all? Well, yes and no.
On the one hand, it’s only another way to pay, competing with the aforementioned contactless cards as well as chip and PIN cards, Oyster cards and good old-fashioned cash. However, it does promise a future where all you need to take with you when you leave home is your smartphone, certainly if your day will involve a retail payment or two – and perhaps even a Tube ride.
Overall, the arrival of Apple Pay heralds a new dawn for mobile contactless payments and allows users to load their own (participating) bank cards directly into the iPhone Wallet via a very straightforward registration process: as such, it can be seen as a user-friendly success.