Apple Pay in Ukraine. What makes it so important?
During the earnings call for Q2 2018, Apple CEO Tim Cook announced the company is planning to expand its Apple Pay digital payments service to Ukraine.
He did not provide any specifics, only that the launch was scheduled on the next few months.
On 17 May, Apple Pay became available in the mobile application “PrivatBank 24”. A remarkable speed of action. Which, in itself, speaks volumes.
Haste makes waste, or does it?
No doubts that Apple was in a rush to launch the service. Our connection to the service came even faster than Norway and Poland mentioned in Tim Cook’s message. And these countries are more successful as far as the economy and technologies are concerned.
It goes without saying that Apple Pay planned to expand to Ukraine for a long time as rumored by Maksim Patrin, Head of E-business at Alfa-Bank Ukraine. A year ago he said that Apple Pay would debut in Ukraine by late June 2018 citing his insider sources. And he was correct for the most part.
What does all this tell us? It means that the Ukrainian market has potential and is compelling for Apple, and the number of contactless payments in Ukraine is skyrocketing.
According to the National Bank of Ukraine, last year marked a 37.8% growth in contactless cards (2.7 billion). To compare, the figure was 1.45 million as at 1 January 2016. While contactless cards accounted for 8% of all payments in 2011, in 2016, their number hit over 35%.
This, however, is not even the most important. Unlike Europe and the USA, Apple Pay faces much less competition in Ukraine. Of course, local banks such as Ukreximbank, Ukrsibbank and others have already rolled out similar digital services but their audience is limited and includes only the clients serviced by such a bank. Secondly, all these services have significant flaws. To name a few, EXIMpay works only with Visa cards, whereas Kredopay works only with Mastercard.
Apple Pay, however, is a “universal soldier”. It supports a variety of cards issued by different banks provided they have the technologies needed.
Apple Pay has only one strong competitor on the Ukrainian market – Google Pay. But that’s a whole different topic for another time. Given the increasing popularity of Apple devices among Ukrainian consumers, Apple has bright prospects ahead.
What about the gloomy side?
The rapid advent of Apple Pay can catch many Ukrainian companies and banks off-guard. It remains to be seen whether they can implement the technology rails for the service and how much time will it take.
Even Privatbank has not introduced all the functions yet, although being the first to integrate the Apple Pay. That way, Apple Pay users have no access to the bonuses that the Privatbank’s loyalty program Bonus+ offers.
Without the banks and state authorities being proactive, Apple Pay in Ukraine may not bring any meaningful results especially for those living outside the major cities. Some towns and small settlements even do not accept credit cards let alone the contactless cards.
Moreover, the case with Google Pay only adds more pessimism to the issue. Many waited for it, and many hoped for it. However, if we look at the Privatbank’s statistics, the low transactional activity in this service is self-explanatory.
There are tens of thousands of users, whereas the total of credit card holders serviced by Privatbank almost reaches 20 million.
The reason behind this is a poor distribution of NFC technologies that the entire system of contactless payments is based on. And the problem is not just the terminals alone, but the infrastructure too. Even an NFC smartphone will cost on a pretty penny, which an average consumer is unlikely to afford.
What can Apple Pay change in Ukraine?
All things considered, one can hardly expect an en masse transition to the Apple’s contactless service in the nearest future. The Ukrainian infrastructure lags behind. It is quite possible the situation can change in a year since technologies are known to grow exponentially.
Another peculiar point is that the very news about a big company such as Apple rolling out its product on the market tosses challenges at certain companies.
For all intents and purposes, it is another signal for the business that the country does not drive off the development track. Furthermore, it is an excellent newsbreak for Ukraine.
This post is also available in: Russian