Mike Blake
Apple Pay is hopping to a new market – the U.K. What happened to Canada?
The mobile payments service has been top of mind among a number of Canadian bank executives, who believe that Apple Inc. will soon extend the service to Canada, potentially taking lucrative payment fees away from the banks and also getting between them and their customers.
Canada is a natural extension for Apple following Apple Pay's U.S. debut in October. Here, iPhones have a market share that is considerably higher than the world average. As well, most technology-friendly Canadian merchants can already handle Apple Pay, which allows consumers to make purchases using a technology known as near-field communication.
But despite reports suggesting that a Canadian launch could come as soon as November, the U.K. got the service first.
Apple confirmed this week that it will launch its U.K. Apple Pay service in July. A number of banks have already said that they will support the payment system, including big ones such as HSBC, NatWest, Royal Bank of Scotland and Lloyds Bank.
The lead-up to the launch gives Canadian banks plenty to think about. Here are three suggestions:
1. Leave no bank behind.
Barclays PLC is a notable holdout in the first round of banks offering Apple Pay, which is giving the U.K. bank some unfortunate press coverage. "Millions of Barclays customers will NOT be able to use Apple Pay," the Daily Express declared.
Will there be holdouts in Canada? There is no doubt that there will be reservations among banks that have invested considerable energy in their own payments technology. But the pressure to launch the service at the same time is going to be intense.
2. Turn that frown upside down.
Sure, Canadian banks aren't happy about paying a fee to Apple for every transaction and surrendering important contact with their customers. But if the U.K. serves as a model, the banks are probably going to have to play up the advantages of the mobile payments technology without dwelling on the downside.
"We are delighted to offer Apple Pay in the U.K.," Lloyds Banking Group said in a statement. HSBC was similarly pumped: "It's just one of the ways we're helping our customers manage their money the way they want to."
3. A wallet killer isn't a stock killer.
Consumers can store their cards on Apple Pay, making it a real threat for companies that make wallets. But are banks threatened?
It's hard to see much impact so far. Since Apple Pay launched in the United States in October, the 24-member KBW Bank Index has risen 9.5 per cent, outpacing the S&P 500.
These are early days in the U.K., of course, but there is little sign of concern there either: The FTSE 350 banks index has wobbled a little this week – likely due to bets on the direction of bank levies and bailout discussions with Greece – but is up 5.5 per cent this year.
David Berman