Apple Pay a damp squib, don’t look to US for innovation

Despite a barrage of hype, Apple Pay has turned out to be a damp fizz Stateside. In fact, it’s one of Apple’s failures, according to Chris Skinner, Chair of the The Financial Services Club  and Non-Executive Director at FinTech consultancy firm 11:FS.

“First, there are many payment methods already deployed and available for most American consumers including cash, cheque, credit or debit card, PayPal and more,” Skinner says in a blog post. “Second, it is not just the choice of payment methods but also the breadth and depth of acceptance. For most US stores, their preferred payment method is cash or card, and that’s pretty much the same in Europe; whilst China’s stores all take QR codes. Third, there has to be a reason for consumers to change their payments behaviour and the US has not created any yet.”

He goes on to highlight how China’s red letter days made the difference when Tencent and Alibaba went head-to-head, and Singles' Day and other events since have created the behavioural change. In terms of Apple Pay’s performance Stateside, there has to be scale and support for change, and the USA doesn’t have it as there are too many financial providers with too many different interests. “If the USA had Facebook and Amazon offering simple payments in apps, it might have taken off far faster than it has; but the fact that Tencent (800 million users) and Alibaba (540 million) pushed mobile payments hard into the Chinese consumers hands made the transformation easy.”

He adds: “It surprises me that these giants can fail so badly, but then you shouldn’t look to America for innovation. We should look South to Asia, Africa and South America. This is because these countries are not hampered by legacy payment infrastructure and their internet innovators are thinking far more out-of-the-box because they didn’t have a large scale mass consumer payment system in place, other than cash. Most Chinese citizens didn’t have bank accounts or credit or debit cards and so they could leap across straight to mobile payments.”