SINGAPORE: Apple has launched its mobile payment and digital wallet service in Singapore on Tuesday (Apr 19), but analysts told Channel NewsAsia that local consumers may need some time to warm up to this new payment service.
“I think that consumer adoption of Apple Pay will be slower than expected in Singapore,” Ms Ng Zhi Ying, a researcher at Forrester, said.
“The use of contactless card payments is increasing in Singapore, and consumers are comfortable with using it… but it will take time before these wallets become more convenient for customers and for customers to realise the benefits and additional value that digital wallets bring,” she added.
Another factor that could potentially slow down the adoption rate of Apple Pay in the Republic is the lack of a more comprehensive coverage of bank cards.
In a statement, Apple said its mobile payment service will be available for eligible America Express-issued credit cards in Singapore, while some other banks including DBS Bank, UOB and Standard Chartered will also provide the service in the coming months. Visa announced later in the day that its cardholders will soon be able to enjoy the service.
But another analyst believed that this may not be enough.
"To begin with, they have launched only with Amex, and though they will add Visa and some banks in short order, they will need comprehensive coverage of bank cards to be able to be successful," IDC's Asia-Pacific consumer mobility and social consumer research associate director Shiv Putcha said.
BANKS TO LOSE OUT FROM APPLE TIE-UP?
Meanwhile, Forrester's Ms Ng cautioned financial institutions from rushing into forming partnerships with Apple Pay.
While Apple Pay may help to increase transaction volumes, banks may stand to lose out on crucial customer data from their own apps if consumers stopped using the banks' services, the analyst said.
“If customers are happy with Apple Pay, it may increase the volumes of transactions which benefit banks and card issuers,” she told Channel NewsAsia in a telephone interview. “But if Apple Pay becomes the primary medium for consumers, instead of the banks' own mobile payment apps, then banks may lose access to data on customer transactions.”
As such, financial institutions should not “simply cede the digital wallet relationship to Apple Pay”, said the Singapore-based analyst, who believes that banks should “carefully consider the sources of value that a partnership will bring”.
However, Euromonitor's analyst Lim Yu Xian thinks otherwise. "External payment services might erode customer loyalty and there is a cost of convenience involved to use them. But this is a little sacrifice that banks have to make to ensure they do not lose out in the initial race with third-party platforms."
Apple Pay is currently available in the US, China, Australia, the UK and Canada, and is expected to land in Hong Kong and Spain this year.