Apple Pay is not just a way of contactlessly paying for items in-stores, Apple Pay is a digital wallet – an application which collates your cards, tickets and loyalty points all in one place, forgoing, in theory, the need for a physical wallet.

Customers shopping online will be able to purchase items by selecting Apple Pay. Delivery details will be remembered and consumers authenticate the payment, not by entering lengthy card numbers, but similarly to contactless by using the fingerprint Touch ID function.

Launch retailers who will accept Apple Pay in their apps include Addison Lee, Airbnb, Argos, Booking.com, British Airways, Domino’s, easyJet, Hailo, HotelTonight, hungryhouse, JD Sports, Just Eat, lastminute.com, Miss Selfridge, Ocado, Stubhub, thetrainline.com, Top 10, Topshop, Uncover, Vueling, YPlan, Zalando and Zara. And this service is compatible with iPhone 6, iPhone 6 Plus, iPad Air 2 and iPad mini 3.

Popularising the mobile wallet

But Apple is not the first to develop a digital wallet, with variations of services available for the last few years: Google Wallet launched in 2011, PayPal in 2001 and Visa’s V.me service plans to roll out this autumn.

Miya Knights, global retail technology research director at Planet Retail, told Essential Retail that the variety of online payments in existence is a testament to how fragmented the payments industry is.

She also said the delay in mass adoption of digital wallets has been because it is difficult to get the four main stakeholders – consumers, merchants, banks and card issuers – to agree on terms.

“There are too many vested interests and everybody wants to know how they’ll make money from it,” she explained.

Dan Salmons, managing director of mobile and online for PayPoint, said Apple Pay triumphs the many other generic digital payment solutions due to its brand awareness and consumer reach.

“Unless you are a payments geek, you could be forgiven for not noticing when other e-wallets have come and gone. But when Apple does something – whether it introduces a new add-on or provides an update – consumers take notice,” he explained.

“In many cases, people find that they already have the device to use it. As a result, I believe there will be very rapid acceptance of Apple Pay for digital payments here in the UK, far faster than in face-to-face retail where there is a dependency on the roll-out of physical terminals.”

June Felix, president of Verifone Europe, agreed, saying Apple Pay is finally going to make digital wallets a reality which has been talked about since the mid-2000s.

“The biggest problem is consumer adoption and Apple is a company who can drive this by creating excitement and transforming people’s buying behaviours. That’s always been the hard part, a lot of people have tried, but Apple has been able to make consumers shift their behaviour.”

Threat to existing services

But if Apple’s latest mobile offering is likely to popularise digital wallets, what will happen to the existing players in the market?

Research from Forrester concluded that 27% of UK iPhone owners would trust Apple to provide a mobile digital wallet, but 43% would trust PayPal, while just over 40% would trust a bank or credit card network.

Knights said: “If Apple achieve mainstream adoption on the high street for physically buying goods, it stands to reasons that consumers are more likely to go online and use the same payments facility which will threaten the likes of PayPal.”

But PayPal seems to have dodged that Apple-shaped bullet by agreeing to work closely with the tech giant. In a blog post, the digital payments provider explained how its open online payments platform Braintree allows merchants and developers to accept different payment methods – including PayPal, credit and debit cards and Apple Pay.

Additionally its latest PayPal Here card reader will accept Apple Pay contactless payments in stores.

Meanwhile, Visa said its solution – which is a partnership between banks and retailers to provide online payments authentication – will not compete with Apple Pay.

Jeremy Nicholds, executive director of mobile at Visa Europe, said: “With the launch of Apple Pay, Visa is opening up another exciting option for consumers to pay in-store and in-app with mobile devices. We don’t see the different solutions competing – our strategy is to enable customers with a range of smart, secure options to pay and be paid using their Visa card - no matter what channel, service, or device they choose to use or carry.”

Whether or not Apple Pay wipes out its eCommerce competition, its influence is likely to get more consumers spending online as it brand influence makes it the norm to do so.

PayPoint’s Salmons concluded: “The year before the Apple Watch launched, only 800,000 smart watches were sold globally.  For the year after, the predictions reach 20 million, and not all of these were for the Apple Watch. If the same thing happens with Apple Pay, then it may prove not only to be an important new payment mechanism, but a powerful catalyst for consumer uptake of mobile payments generally.”

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PayPal

Verifone

Planet Retail