Apple Pay takes US by storm but journey abroad looks challenging

APPLE has made mobile payments look easy, after a decade of mostly failed experiments by banks, telecom operators and retailers to woo consumers away from cards and cash.

Apple Pay has taken the US by storm since its launch in September, and the company has said it already accounts for about $2 (R24) out of every $3 spent using “contactless” payments on the three big US card networks.

But the tech giant will need a whole lot more magic as it looks to extend the service to international markets.

Unlike the consumer electronics business where Apple regularly rolls out new computers or phones in dozens of countries at once, there is no such thing as a unified payments market.

Each country is inhabited by often warring banks, credit card associations, telecom operators and retailers, while payment preferences and regulatory regimes can vary widely.

Morgan Stanley technology analyst Andrew Humphrey said: “Every market will have different local players, different partnerships, different local standards, different economics, (and) different levels of cooperation.”

New markets

Apple Pay allows consumers using new Apple phones, tablets and smartwatches to buy goods by simply holding the device up to readers installed by store merchants. Its potential global customer base is huge: the 800 million Apple users who have already connected credit and debit cards to iTunes accounts.

But industry executives and analysts said as the Silicon Valley firm geared up to push into a handful of new markets in the Americas, Asia and Europe this year, it should step gingerly, one market at a time.

It was expected to turn to preferred partners in new countries rather than the broad coalition of financial service players it had managed to assemble at home, where the contactless market was relatively new, they said.

“Apple doesn’t need blanket coverage to start,” Humphrey said. “(It) can negotiate with a smaller number of banks in each market.”

Industry experts said the most likely targets were advanced mobile markets such as China, Japan and Britain, and aggressive adopters of new payments systems like Australia, Poland and, to a lesser extent, Canada.

“Apple, being Apple, will force its way in,” said Andrew Gardiner, the European technology hardware analyst for Barclays. “The expectation in the industry is that Apple will be launching in new markets in the next quarter or two,” he said, citing conversations he had had with credit card firms and major banks in Europe.

Apple is not giving any clues about where it might move next.

“Apple Pay is available in the US,” the official site simply states. A spokesman declined to comment on plans for international expansion. – Reuters