Apple Pay Makes a Play for the UK's Mainstream

Will wider acceptance and greater spending limit crack contactless cards' dominance?

May 22, 2017

The long-anticipated mainstreaming of mobile payments in the UK may have just moved one step closer to reality. Apple Pay is now available to more customers and is closing the gap with contactless cards when it comes to convenience, according to an Apple executive.

In a May 21 article in The Telegraph, Jennifer Bailey, head of Apple's payments business, said more than half of contactless payment terminals in the UK were now able to take so-called limitless Apple Pay transactions.

Previously, the majority of card readers could only process payments of up to £30 ($40.50), a move imposed by the UK Cards Association, a trade association for the UK’s card payments industry. The limit had been imposed as a way to prevent the fraudulent use of contactless cards, which do not require a signature or PIN number to complete transactions.

Greater convenience could light a fire under fairly tepid uptake of mobile payment use in the UK. Recent studies have shown lower use of mobile payments—Apple Pay or otherwise—in the UK than might be expected in a country where, according to eMarketer estimates, 64.3% of the total population and 79.3% of mobile phone users will be smartphone users by the end of the year.

A survey of UK internet users conducted in Q4 2016 by GlobalWebIndex found just 6% of respondents had used Apple Pay to make a purchase via their smartphone. Even fewer respondents had used Android Pay, the payments service tied to Google’s mobile operating system of the same name.

But Apple Pay's increased availability and the absence of caps on transactions could soon make stats like those obsolete. Both features have the potential to erode the potential advantages of contactless cards over digital payment options. Cards still have wide retail acceptance, the convenience and speed of PIN-free payments and the perception that they are more secure than mobile payment apps.

“Mobile payments in the UK have had a tough time competing against already well-established contactless cards—there has been no compelling reason to switch. This move sets mobile payments apart, though, positioning them as an attractive alternative," said Bill Fisher, eMarketer senior analyst and author of the January 2017 report, "UK Mobile Payments: After a Slow Start in a Competitive Space, Some Signs of Progress" (available only to eMarketer PRO subscribers). "There are still some concerns among consumers around issues of security, but this is an important first step in bringing mobile payments closer to the mainstream.”

According to The Telegraph, Apple Pay transactions in the UK grew by 300% in the past year, and are now supported by 23 banks.