Should small retailers rush to adopt Apple Pay?

4th August, 2015

Apple Pay was lauched in the UK on the 14th July, with over 250,000 UK retailers accepting the new contactless payment method.

What is Apple Pay?

Apple pay is a new feature on recent Apple devices, which allows users to purchase goods and services quickly and conveniently from Apple devices, such as the iPhone and Apple watch.

The most recent devices can be used to make contactless payments in thousands of participating retail stores and Transport for London (TfL)’s Tube, bus and rail networks.

Apple Pay also allows single touch online purchases from within apps, on Apple products running iOS 8.3 or above.

How does Apple Pay work?

Apple Pay makes use of Apple’s ‘Passbook’ app (soon to be rebranded ‘Wallet’), which can be used to digitally register credit and debit card details.

Once card details have been stored in Passbook, owners of the iPhone 6, 6 Plus and Apple Watch are able to make contactless payments for goods and services with participating retailers, using near-field communication (NFC) chips, embedded within these devices.

Another feature of Apple Pay - which is also available in a number of other Apple devices (running iOS 8.3 or higher), is single-touch online purchasing from within apps. This feature makes use of Apple’s Touch ID sensor to verify purchases.

More information about Apple Pay is available on Apple’s website.

How will Apple Pay impact UK businesses?


Apple Pay was launched in the United States in October 2014, but in a recent study, research consultancy Gallup found that only 21% of iPhone 6 users used their device to process Apple Pay transactions and according to, 60% only used the service once.

In the UK however, Apple Pay is expected to be adopted more rapidly, as we are further ahead in our use of NFC and contactless payments. Despite this, many retailers do not currently use the ‘standard payment encryption’ devices needed to support NFC, so they will need to upgrade if they wish to adopt Apple Pay.

It is a different story with online app payments, where no additional hardware is required. Many small retailers already use services such as Shopify, which allow businesses to set up an online shop front to process online orders and take payments – including by apple pay.

Furthermore, the hardware and card readers that Shopify provides to store retailers, don’t currently support Apple Pay, however the company does plan to change this.

Spending Limits

There is currently a £20 limit on contactless card payments in the UK, which is set to rise to £30 in September. This is anticipated to lessen the adoption rates of Apple Pay payments, however there is no such spending cap in the US currently.

UK retailers will have the option to accept higher payment amounts, but will need to invest in terminals that enable Consumer Device Cardholder Verification Method (CDCVM) technology. This hardware uses additional security when processing mobile payments and removes the merchant’s liability for fraud when Apple Pay is used, because it is supported by payment card networks.

Considering these factors, many retailers will not rush to adopt Apple Pay, however this does not mean that businesses can afford to ignore their overall mobile strategy.

The Mobile Experience should be Prioritised

Goldman Sachs predict that the value of mobile commerce (buying products and services on mobile) will reach $298 billion (£191bn) next year. This figure is expected to more than double by 2018 to $626 billion, which is close to last year’s figure for e-commerce alone ($638bn).

This emphasises the need for retailers to offer a shopping experience that is specifically designed for mobile users.

Traditional mobile shopping involved cramming desktop website layouts onto smaller mobile screens, which was not the most user friendly of approaches. Nowadays however, mobile-friendly websites are essential for online retailers to ensure a seamless navigation and checkout process for their customers.

The requirement of customers to enter personal information and card payment details for each and every online transaction is not a popular one with customers, which is an area that PayPal has been able to take full advantage of and where mobile payment solutions such as Apple Pay can continue to develop.

A secure single-touch payment button provides a fast and simple checkout experience for customers and new software allows retailers to integrate this feature into their own mobile apps – the theory is that fewer taps on screens means more sales.

Apple’s rival Android has also announced plans to release its own competing mobile payment system called Android Pay, which is expected to be released later this year.

Looking to the future, Apple plans to support merchant loyalty cards, which will be integrated within each users Apple ‘Wallet’. Android have also proposed similar functionality in its competing Android Pay system.

In the United States, the hospitality industry has enthusiastically embraced NFC capabilities, with several hotels rolling out keyless room entry for guests using their mobile phones instead of key cards.

Marriot hotels now allow guests to use Apple Pay to pay for dinners and drinks by the pool and takes advantage of benefits from the US not imposing a spending cap on contactless payments.

Stay ahead of the digital curve

The main point to take away is that consumers use different mobile devices and have different shopping habits. Therefore, to maximise opportunities of increasing sales, retailers will need to support mobile payments across all devices, not just Apple Pay.

If retailers align their mobile shopping experience in line with the growing demands of today’s mobile centric shopper, it will help to improve their competitive edge and ability to stay ahead of the competition.

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