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Apple Pay: Accelerating the rise of M-commerce

As Apple Pay reaches the UK, we have to ask ourselves the question, will we ever shop the same way again?

The way we shop online and offline has fundamentally changed. Contactless payments are popping up in high street shops, restaurants and train stations every day and in-app payments have reinvigorated E-commerce. It's been a breath of fresh air for consumers and retailers alike, but while uptake has been steady on the rise for the last 12 months, the introduction of Apple Pay in the UK this week has significantly changed the pace. Here's why:

  • British consumers are mobile shoppers: The results of our Q2 2015 State of Mobile Commerce report demonstrated a clear trend of consumers 'going mobile'. Customers are increasingly abandoning their desktop computers and laptops, in favour of tablets and more recently mobile devices, to research products and services and ultimately make the final purchase. This is particularly true of the UK, as in the second quarter of this year, it surpassed South Korea as the second largest mobile commerce market in the world.
  • Apple dominates M-commerce in the UK: Apple's iPhone is the preferred mobile device for shopping in the UK, compared to the global market where it comes second to the likes of Android.
  • Millennials are a mobile-first generation: The usage of smart devices only increases with younger generations as detailed in Deloitte's 2014 report, which shows mobile device penetration at around 80% for millennials compared to only 39% for those aged 55 or over. With the introduction of mobile payments systems, millennial users are likely to rely even more heavily on their mobiles to support their lifestyles, thereby increasing the expectation of mobile payment capability on both online platforms and offline in high street stores.
  • The UK is turning into a cashless society: Earlier this year, the UK Payments Council released a report showing that for the first time in July 2014, card payments had officially overtaken cash as the preferred choice for completing financial transactions - signalling a seismic shift in payment habits amongst Britons. As Apple Pay in turn, converts card users into mobile purchasers, we are likely to see a rapid acceleration of the growth of mobile's share of the E-commerce market.

Compared to the US, the UK is far more prepared for the adoption of this new branch of M-commerce, having already laid the ground work and infrastructure to accept cashless payments - which is the main reason why uptake in the US has been slow to date. While in-store contactless payments via Apple Pay will only accept up to £20 (rising to £30 in September 2015), it will be interesting to see how online sales will be impacted. Apple Pay will operate much like PayPal, but with greater touch encryption. Given eBay and PayPal's pending divorce and rise of online flash sales like Amazon Prime Day last week, we can expect to see Apple Pay appear on our favourite retail sites, undoubtedly driving considerable increases in commercial spending across the UK.