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Apple Pay debuts in S'pore; analysts say it'll take time to catch on

Some say it will do well, but others say consumers need to get used to mobile wallets

Gone are the days of thumbing through your wallet for cash or the right credit card, Apple said on Tuesday, at the Singapore launch of its mobile-payment platform Apple Pay.


GONE are the days of thumbing through your wallet for cash or the right credit card, Apple said on Tuesday, at the Singapore launch of its mobile-payment platform Apple Pay.

The Republic is the sixth country in the world and first in South-east Asia to land the service.

Analysts are divided on its take-up rate. While some say Apple Pay is a strong alternative to the EZ-Link Near-Field Communication (NFC) SIM card service rolled out last month, it may see slower-than-expected consumer adoption, even as contactless payments become more popular here. Among those in the more upbeat camp is DBS analyst Sachin Mittal, who told The Business Times that Apple pay supports - not disrupts - credit and debit cards, so it can expect quick adoption ahead.

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Apple Pay works by letting its users add credit or debit cards to their Apple device, and make payments at retail outlets by holding the device near the retailer's contactless reader. iPhone and iPad users authenticate the transaction by holding their fingerprint to the device's Touch ID sensor; Apple Watch users do so by double-clicking the side button of the watch.

For a start, Apple Pay is available only to cardholders of eligible American Express (Amex) credit cards, through which consumers can make payments easily, securely and more privately, said Jennifer Bailey, vice-president of Apple Pay.

The service will be extended to DBS, UOB and Standard Chartered cardholders in "the coming months", she added in a statement on Tuesday. Visa said that Apple Pay would be available to cardholders in Singapore soon.

Apple Pay is now accepted at retailers ranging from grocery store FairPrice to boutiques Topshop and G2000 to restaurants and cafes such as Din Tai Fung and Starbucks; Cold Storage, BreadTalk, FoodRepublic and Uber are expected on board soon.

Security and privacy is at the core of Apple Pay, said StarHub, the only telco merchant currently supporting the service. It said: "When you use a credit or debit card with Apple Pay, the actual card numbers are not stored on the device, nor on Apple servers. Instead, a unique Device Account Number is assigned, encrypted and securely stored in the Secure Element on the device. Each transaction is authorised with a one-time unique dynamic security code."

Mr Mittal said that iPhone owners, who make up almost a third of the smartphone market here, will be "delighted" to use Apple Pay as there is zero cost for the added convenience and security it offers - unlike the EZ-Link NFC SIM card, for which Android smartphone owners have to spend about S$37 to put to use.

Apple Pay has an edge over the EZ-Link NFC SIM card in its fingerprint-recognition, security technology, through which only the iPhone owner can make the contactless payment, said Mr Mittal.

Forrester senior analyst Clement Teo also described Apple Pay as a strong alternative to the Android ecosystem powered by the EZ-Link NFC SIM card.

"Apple Pay increases the number of use cases for payments, offers a less fragmented OS ecosystem, and enlarges the pool of players in the payments ecosystem. Credit card players are also partners," he said.

The EZ-Link NFC SIM service, while a good start for public-transport usage, is limited to specific Android phone models and does not include credit card players, he said, adding that Apple Pay will be a model for mobile payments, in particular with the growing adoption of wearables such as the Apple Watch.

But other market observers are less buoyant. Forrester researcher Ng Zhi Ying said: "Consumers are comfortable with using (contactless card payments) … but it will take time before digital wallets become more convenient for them, and for them to realise the benefits and additional value that digital wallets bring."

EZ-Link chief Nicholas Lee agreed that it is still early days. He said: "NFC in Singapore has not been taken up in a big way yet, and it remains to be seen how people will take to using mobile phones to pay, instead of using cards as they have been used to."

But he noted that mobile wallets are gaining traction as consumers are more savvy now and digital payments offer more "interactivity" than credit or debit cards, in that consumers can check their transactions and balances on the go.

Apple Pay's launch on Tuesday comes ahead of Samsung Pay and Android Pay, both of which are reportedly expected to roll out in Singapore this year. Samsung Pay will have DBS, OCBC and Standard Chartered among its partner banks, as well as American Express, MasterCard and Visa.

Ms Ng of Forrester said: "We anticipate further fragmentation in the mobile-payments market, but this is not necessarily a bad thing. Consumers can choose from a wider variety of digital-wallet providers and these providers can test and learn from what works with consumers and provides them with greater value."

Some market observers on Tuesday remarked that Amex was a strange choice for Apple Pay's first partner in Singapore, but the American financial-services corporation said it believes it is important to be at the forefront of seamless, innovative payment solutions for its members, and Apple Pay "delivers on all that".

Cheng Heng Chew, country manager of American Express Singapore, told BT: "American Express also wants to be where our card members are, and that's increasingly on mobile devices."

Apple Pay debuted in the United States in October 2014, in the United Kingdom in July 2015, followed by Canada and Australia that November and in China in February this year. It is expected to land in Hong Kong and Spain later this year.