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Apple Pay: a chance to benefit from the Apple halo effect or a risk too far?

Andrew Hartshorn, partner and IT law specialist at Shakespeare Martineau tells us about Apple Pay, which, has now launched in the UK, allowing iPhone, iPad and Apple Watch users in the UK to take advantage of the mobile payment technology for the first time.

Seemingly destined to succeed, Apple Pay has already attracted more than 250 merchants including Marks & Spencer, Lidl and Boots and eight high street banks including NatWest and HSBC. However, others are likely to remain cautious about the possibility of early teething problems similar to those experienced following the technology’s introduction in the US last year.

Of course, adopting any form of new technology carries risk. However, being an early adopter can also bring wide-scale benefits for retailers, banks and consumers alike. Many retailers already have contactless payments in place, so implementing Apple Pay is relatively easy to do and in some cases will happen automatically. Choosing to introduce innovative payment methods and react quickly to consumer demand for greater convenience also helps to position such businesses as –forward-looking and focused on enhancing the consumer shopping experience.

Although Apple is highly-experienced in rolling out its technology on a national and of course global scale, they are wise to focus efforts on ensuring that the Apple Pay security system is watertight with early adopters before offering it more widely. The £20 cap on contactless payment transactions (due to go up to £30 in September) could also help to deter fraud, although the Apple Pay system will allow higher amounts to be paid. Whilst not in itself more secure than using credit cards, the frequency with which people use their smartphone as opposed to their credit cards may mean that the loss of the device would be spotted more quickly than the loss of a credit card.  Similarly, once a device is stolen or lost, cancelling Apple Pay will be a single act – as opposed to needing to contact all your various card holders.

For instance, people who own an Oyster card which brings with it travel cost-savings, could be confused about which payment method to select when paying for tube or bus tickets in London. Although Apple has gone some way to ensure that safety measures are met, fraudsters are more adept than ever at bypassing personal security systems, such as pass codes, therefore the pressure is on to continue to create innovative privacy solutions that will keep any sensitive information secure.

As contact-less payment methods go, the potential risks of using Apple Pay appear to be fairly minimal – for both consumers and retailers. Apple has described it as an opportunity for consumers ‘to pay in a simple, secure and private way’. The fact that this payment method provides the retailer with less customer data than most traditional forms of payment, means there is a reduced risk of data theft or misuse. However, with less customer data, comes less intelligence for the retailer and retailers may need to seek new ways of gathering information about customers’ buying behaviour. One way of doing so would be to make their loyalty card schemes more beneficial to customers to encourage greater use. The forthcoming Apple Wallet is due to bridge that gap by enabling the inclusion of loyalty card details.

The biggest impact of Apple Pay may be in the way mobile payments are processed. The Apple Pay system will allow merchants to take payments via a single click – a significant improvement over the current more complex approaches.

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