NFC payments in the UK have received a long-awaited fillip in the form of the launch of Apple Pay. The July 14 launch, coming some 8 months after the service made its US debut, had a few predictable hiccups – there was considerable confusion about which cards and banks were accepting the service, and which retailers – but it is likely that the scale of UK activity should exceed that in the US, at least in the short term.
The reason for this is that contactless infrastructure is considerably more widespread in the UK, while consumers have become accustomed to paying for lower value purchases via contactless cards: by December last year, UK consumers were making around 46 million such transactions per month.
While the existing infrastructure should also accept payments from other NFC-enabled handsets, only a small minority of those handsets actually contained an NFC SIM card containing a secure element (SE). By contrast, the latest iterations of the iPhone have an embedded SE, meaning that the device can be used for purchase as soon as the consumer loads his or her debit or credit card details onto it. Helpfully, the embedded SE model also means that Apple doesn’t have to deal with the network operators at any stage in the proceedings, a principal factor behind both the economics of the service (they add up) and the launch date of the service (unlike many operator-led initiatives, this one went ahead on schedule).
Juniper today put the service through its paces, with Nitin Bhas of this parish successfully purchasing a bunch of bananas at the Basingstoke branch of a leading high street retailer.
However, one bunch of bananas doth not a cashless society make. Yes, we are seeing increased spend on cards; yes, we will see other smartphone-based contactless offering benefit from the afterglow of Apple’s entry into NFC, particularly now that most of them are also eschewing the SIM-based model in favour of HCE (Host Card Emulation), where the SE resides in the cloud. But there are countless shops, pubs and restaurants which have yet to embrace these new-fangled credit card terminals, let alone engage with smartphone-based transactions. So even if your phone now doubles as a digital wallet, it would be prudent hang onto your physical wallet for the foreseeable future.