Barclays Apple Pay support will bring one of the UK’s largest banks into Apple’s mobile payment ecosystem after months of holding out against the service. Barclays has indicated that customers should be able to use their eligible cards with Apple Pay within the next 60 to 75 days, putting the bank in line with other major UK financial institutions.
The decision illustrates the challenge banks face when deciding whether to support third-party mobile wallets or promote their own payment technology. Barclays had invested in its own mobile payment services, particularly for Android devices, giving the bank an alternative to Apple Pay as well as additional leverage in negotiations over fees.
Apple Pay is a digital wallet service from Apple that lets users make payments in stores, online, and in apps using their Apple devices. With it, users can add their credit and debit cards to their iPhone, iPad, or Apple Watch and use them to pay for purchases with a single tap. It is accepted at millions of retail locations and online stores, making it a convenient way to pay for everyday items.
In response to a customer inquiry, Barclays has showed it intends to end its holdout against Apple Pay within the next 60 to 75 days. The news means that Barclays will join the rest of the major UK banks in accepting the mobile payment solution and stop it’s more than 6 month holdout. Barclays has been one of the most vocal opponents of Apple Pay due in part in part to its own HCE-based mobile payment service for Android phones and other Barclay based mobile solutions that gave the bank leverage in its fee discussions with Apple.
Apple Pay Faces Different Challenges Outside the U.S.
While the move ends a significant sore spot for Apple in the UK, the technology company still faces an uphill struggle in other early Apple Pay markets around the work like Australia, Canada and China to convince banks over transaction fees. The international struggle highlights in sharp contrast the different experience Apple Pay is receiving in the US and abroad and should serve as an important lesson for other mobile payment service operators looking to launch international services.
Adding Barclays could strengthen Apple Pay’s position in the UK by removing a significant gap in issuer participation. For Barclays customers, the decision will provide another mobile payment option while allowing the bank to continue offering its own digital payment services on other platforms.
The experience also demonstrates that expanding a mobile wallet internationally involves more than convincing consumers and merchants to adopt the technology. Negotiations with financial institutions over fees, control of the customer relationship, and competing payment strategies can influence adoption from market to market. Barclays Apple Pay support may resolve one of those challenges in the UK, but Apple’s experiences elsewhere suggest that building widespread international bank participation could remain a more complicated process.
Overview by Tristan Hugo-Webb, Associate Director, Global Payments Advisory Service at Mercator Advisory Group
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