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Apple brings contactless payments to UK in retail expansion

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Apple is making the UK the first market outside the US for its digital-wallet system as the company fights for a place in the electronic-payments industry.

[LONDON] Apple is making the UK the first market outside the US for its digital-wallet system as the company fights for a place in the electronic-payments industry.

The Apple Pay service will be available at 250,000 retail locations in Britain starting Tuesday, the company said in an e- mailed statement Tuesday. The setup lets consumers use devices such as the iPhone 6, iPads and Apple Watches to make payments similar to transactions with contactless debit and credit cards.

Chief executive officer Tim Cook is relying on new services to expand Apple's digital footprint and encourage people to stay with its products. The Cupertino, California-based manufacturer is facing competitors such as Google Inc. and EBay's PayPal in a US market that Forrester Research estimates is likely to process US$67 billion worth of sales this year and as much as US$142 billion by 2019.

UK Apple users can now buy everything from coffee to diesel with their devices at companies including oil producer BP Plc, restaurant operator McDonald's Corp. and department-store chain Marks & Spencer Group Plc, as well as the Transport for London railway and bus network.

"The UK is an important market for Apple because the level of contactless penetration in cards and accepting terminals far exceeds that of the US," Eden Zoller, an analyst at Ovum, said in an e-mail.

Apple Pay, rolled out in the US in October, uses short- range wireless signals known as near-field communications to interact with cash registers or other payment readers. Unlike a contactless card, which can just be waved near a detector, Apple Pay also requires the user to hold down or click buttons on their device and to position it properly.

Almost half the respondents in a survey of about 3,000 people in February reported difficulties using the system, according to Phoenix Marketing International.

Apple Pay will have to work harder to stand out in Britain because "displacing contactless cards in favor of NFC mobile payments will be more of a challenge," Zoller said. Retailers in other markets, such as Australia, will be watching closely, she said. Australia is among markets that also have a highly developed contactless-payments infrastructure.

The biggest US banks and credit-card networks are using Apple Pay to help accelerate adoption of mobile payments while maintaining control of their transactions. Apple said in March that the service was supported by 2,500 banks in the US and about 700,000 locations. UK card issuers that will use the system include National Westminster Bank Plc, Royal Bank of Scotland Plc and Banco Santander SA.

Google unveiled Android Pay in May, saying the service will be available later this year and tied to loyalty programs. In June, Samsung Electronics previewed its Samsung Pay mobile- transaction system targeted at the US and South Korea.