With over 220,000 NFC terminals in retail outlets, 12 million contactless cards already in circulation, and 60% of Visa and Mastercard transactions in Supermarkets contactless, Australia truly is the land of contactless payment.
This means Australia is poised for Apple Pay to enter the market and transform the payment experience quicker than any other market in the world.
While much of the detail on how Apple Pay works has not yet been released, a lot of intelligent speculation has been possible. For a detailed analysis on how the Apple Pay payment process probably works, Richard Brown’s article http://gendal.wordpress.com/2014/09/10/a-simple-explanation-of-how-apple-pay-works-probably-its-all-about-tokenization/ gives the best analysis based on everything currently known about Apple Pay. Key points here are firstly, that the merchant terminal does not need any changes to process an Apple Pay transaction, and indeed won’t even know the transaction comes from Apple Pay. Hence, the 220,000 existing contactless terminals in Australia will all work with Apple Pay. Secondly, the tokenization that supports the process is generated by the major payment schemes: Visa, Mastercard and AmEx. Since these are also the major schemes operating in Australia, it is fair to assume that it will be straightforward to introduce Apple Pay to the Australian market. Thirdly, since the transaction follows all existing standards, the EMV and PCI implications should be minimal.
What does this mean to the Australian Retailer? First, expect Apple Pay to be adopted in Australia rapidly once Apple makes the technology available. Second, the implementation cost for the retailer should be minimal to zero, as the merchant systems needs no change. Finally, as the information passing through the Retailer’s system is now a token rather than actual credit card details, the risk profile for the retailer is much smaller (of course, the flip side is that retailers will not be able to use the credit card as a means to identify the same customer across multiple transactions).
Australia currently leads the world in two key measures: the uptake of contactless payments, and the penetration of Apple smartphones. As a result, I believe that once Apple make Apple Pay available in Australia, it will rapidly become a commonplace payment method throughout the country.