With Apple Pay now established in the UK, customers have a new method at their disposal for making quick, easy payments using their iPhone or Apple Watch devices. Beyond everyday consumer transactions such as paying for a coffee or using public transport, Apple Pay also has considerable potential within social housing. With contactless payment technology increasing in both sophistication and popularity, its on-going development could provide new levels of convenience for tenants making regular payments using Apple Pay.
By embracing Apple Pay as an additional payment option, housing providers can increase choice and convenience for their tenants, while reducing the administrative burden created by older payment methods by further digitising their collection processes.
From a tenant’s point of view, flexibility and choice are very important, especially when it comes to budgeting their income and making rent payments. Digital inclusion, of which Apple Pay represents a key part, goes a long way towards providing this. Smartphone ownership, even among lower-income groups, is increasing rapidly, pay-as-you-go deals are getting cheaper and the phones themselves are becoming more affordable as one-off costs. Adopting Apple Pay as a payment option helps to bring that flexibility, in the form of a service which is familiar to many users.
At present, Apple Pay transactions must be within the same £20 limit as contactless bank cards, with this expected to increase to £30 in September 2015. This would mean that for now, the platform is useful mainly for making lower value housing payments, including rent top-ups and reducing arrears, assuming the tenant is permitted by the housing provider to make payments in this way. However, the security advantages that Apple Pay holds over standard contactless cards raises the possibility of much larger payments being made through the service in future.
Inevitably, such a swift and straightforward method of parting with cash will raise concerns about safety, especially among tenants who may be following strict budgets. To combat the threat of fraud, credit or debit card details are not stored on the tenant’s device or on Apple’s servers when added to Apple Pay. Instead, a unique Device Account Number is assigned, encrypted and safely stored in the Secure Element of the Apple device, and each transaction is authorised with a one-time dynamic security code. A two-factor authentication process, involving a combination of a tap of the phone with the Apple device’s Touch ID sensor, adds an extra layer of security that contactless cards don’t offer.
This offers peace of mind to users in the first instance, but it also makes an unlimited transaction limit a distinct possibility in future, which in turn would mean that tenants could eventually make full housing payments by using the platform. Apple Pay’s two-factor authentication process means that the service is not actually legally bound by the same transaction limit as standard contactless cards. Indeed, Visa and MasterCard have already confirmed that some UK retailers will remove this limit in the near future.
So how could this be deployed for housing payments? The answer lies not in the Apple Pay technology itself, but in the contactless terminals which accept the payments. Currently, most of these are programmed to process transactions at the £20 limit only.
Those outlets which accept and process housing payments can make some headway by being proactive here: invest in the new hardware and software to remove transaction limits on Apple Pay and tenants will immediately have a convenient, highly manageable new payment method at their disposal. In our digital age, convenience is king, and anything housing providers can do to make things easier for tenants on tight budgets is likely to have a positive impact.
Nick Peplow is the bill payments director at Allpay.