Why India Is Not Ready For Apple Pay Yet

by Preeti S    Oct 17, 2014

Apple Pay


The launch of Apple’s mobile payment platform, Apple Pay, is considered to be a revolutionary technology that would change the e-payment space. While targeting over 800 million Apple users having credit /debit cards connected to iTunes accounts, Apple is expected to set a high benchmark in the US. However, its adoption in India is likely to be delayed.

Apple Pay will be available on the iPhone 6 and iWatch in the US from October 20 and over 500 US financial institutions have already signed onto it. It is a move over traditional plastic cards as it allows consumers to load credit card data onto smartphones and pay for purchases by tapping the phone to the credit-card equipment or having a merchant equipment number for online purchases.

Gartner predicts global mobile transaction market to be  worth $721 billion with more than 450 million users by 2017. With India projected as the fastest growing ecommerce market with expected ecommerce market growth at $6 billion (roughly Rs. 37,100 crores) in 2015, it will certainly be one of the major areas of focus for Apple Pay, but India seems to be not ready yet.

 Internet And Mobile Association of India (IAMAI) put the Internet user base in India at 190 million in 2013. The mobile user base is expected to be 815 million in 2014 and half of smartphone users use mobiles for online purchases. 

But country’s central bank Reserve Bank of India (RBI) has some surprising facts in its vision statement for 2015. It says only a fraction of the 10 million plus retailers in India have card payment acceptance infrastructure – presently this number stands at just 0.6 million - and this infrastructure needs to be grown exponentially.

In that perspective, the country is far behind in implementing a technology like Apple Pay.

Slow adoption of NFC

Despite the rapid pace of online transactions, India has been slow in adopting Near Field Communications (NFC), which forms the core of Apple Pay. Gartner says the mobile payments would reach $721 million globally by 2017, with only 5 percent coming from NFC payments.

 And it is being reported that Google would take the sheen away from Apple as Andorid accounts for over 90 pc of India’s smartphone market.

Avivah Litan of Gartner told Firstpost that Apple has it easier in this regard since it has a closed system where Apple manufactures handsets and the software that runs on NFC. “But once Google gets in the game and Android phones are enabled with more secure payments, we may actually see mobile NFC payments catch on, Litan said.

The players in hardware industry feel it is just a matter of time that NFC becomes mainstream.

“It might still take some time before it becomes mainstream, but NFC was always part of our roadmap,” said Sanjay Swamy, chairman of Bangalore-based Ezetap, told The Times of India. 

India still for non-cash payment?

While there is optimism with regard to NFC, India’s Reserve Bank of India has some concerns While it says integration of various systems through unified solution architecture would lead to adoption and usage of resilient payment systems, it strongly feels there is a deeper acceptance and penetration of non-cash payment modes.

It says that the existing “fit for current purpose” payment system infrastructure needs to be transformed into a state of ‘ready for future challenges’ infrastructure. This can be achieved through standardization, interoperability, consolidation, common infrastructure creation and sharing intertwined with innovations in product and delivery channels.

According to Forrester Research , Apple Pay will be much bigger than mere “tap and pay.” It says that at a time when phishing and hacking incidents are on the rise, Apple’s secure platform with new identity and location enablers will be welcomed by financial institutions.

But for India, the concerns about Apple Pay go beyond security and technology.