BY Capgemini
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Capgemini IT: GROWTH ACCELERATOR

IT trends spotted and checked by experts

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What happens

13 June 2016 - Apple announces an agreement to launch Apple Pay with four French partners: the banking group Banque Populaire Caisse d'Epargne (BPCE), Orange, Carrefour, and the French meal voucher provider Edenred. Apple Pay will be launched in France this summer.  

so what?

Executive Director of the Payment Consulting business unit at Galitt Consulting Agency.

Rémi Gitzinger is Executive Director of the Payment Consulting business unit for Galitt Consulting Agency. Holder of an MBA from ESCP Europe, he began his career in the banking sector as an EMV expert...

Following its launch in the UK, Apple Pay has finally come to France. Apple has teamed up with banking group Banque Populaire Caisse d'Epargne (BPCE), telecoms operator Orange and retailer Carrefour (among many others) to promote its mobile phone payment method. The firm believes the simplicity of using Apple Pay and its associated services will make it a winner in France.

What are Apple's chances of succeeding in France?

France ticks a certain number of boxes for Apple. Firstly, the country has a high number of contactless electronic payment terminals (EFTPOS terminals) with around 40% of all retail stores equipped. A large number of the latest iPhones (iPhone 6) and other compatible smartphones are also equipped with the necessary technology, especially in the Paris region. 
Some believe that it is easier to pay with a contactless bank card than having to get out their smartphone. The system offered by Apple, however, is perfect in terms of consumer usability. You simply have to place your thumb on a biometric sensor (Touch ID) and a vibration confirms the payment. 


Furthermore, Apple Pay allows users to make payments greater than the 20 euro limit that contactless cards impose. You negotiate your payment limit with your bank as it is your card which is "signed up" to the virtual wallet. Another advantage of Apple Pay is that you can associate loyalty cards and discount vouchers to this wallet, thus offering possible links between brands and payment methods.

What obstacles to adoption have been seen in other countries?

Launched in the US a year and a half ago, Apple Pay has not been a great success there due to the low number of contactless payment terminals there. In the UK, the roll-out of NFC cards during the Olympic Games helped pave the way for Apple, as did the widespread use of contactless payment throughout London's public transport system.

The firm with the apple logo managed to reach an agreement with banks in the UK, despite initial reluctance from Barclays. And yet, despite a wide availability of compatible payment terminals, use remains limited. It is difficult to have exact figures regarding this aspect of Apple's activities in the country as the company does not communicate these figures.

In Europe, things are different for Apple. The interchange rate, that is to say the amount that the receiving bank (that of the retailer) has to pay to the issuing bank (that of the card holder) is not the same everywhere. It can total between 1.5% and 1.7% in the US, compared to between 0.2% and 0.3% in Europe. On this side of the Atlantic, it is clear that Apple has had to scale down its commission of 0.15% per transaction. 

Before reaching a deal with Apple a bank has to take two things into consideration. Not only is there a risk of its brand becoming diluted by the virtual wallet, but also a risk of disintermediation. Users are no longer using their card for payments - they feel like they are "paying with Apple".

Who are Apple Pay's competitors?

Samsung Pay will be launched in the UK after the summer. Google's Android Pay and LG Pay are also preparing to enter the fray. In contrast to what Apple's in-built system offers, these rivals will have to communicate on three different levels when it comes to such activities: the operating system, the application used by the phone operator and the partner bank. The trend, however, is clear - smartphones are the new wallets. 

Who cares?

  All segments of the payment chain are affected, from banks to retailers. Brands are also concerned. By adding loyalty cards and discount vouchers to the mix, these wallets with enrich customer relations. In France, four of Apple Pay's partners have stepped into the centre stage. The banking group BPCE has found an opportunity to stand out from the crowd, showing its ability to innovate. In the large-scale retail sector, Carrefour's Pass cards - which reward customer loyalty - will be made compatible with Apple Pay. For Orange, Apple Pay will offer an alternative to Orange Cash, Orange's own mobile phone payment solution with uses NFC sim card technology. Finally, by signing this agreement with Apple, Edenred will be able to speed up the process of digitalising its meal voucher system. 
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