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Apple Pay headed to UK for 2015 — but banks fear a financial 'invasion'

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Payment service set to launch in 'first half' of the year

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A major UK bank's concern over data collected by Apple Pay is reportedly stalling negotiations to launch the mobile payments service in the country by "the first half of 2015." The Telegraph reports that "at least one" of the UK’s biggest banks is "uncomfortable with the amount of personal and financial information Apple wants to collect about its customers."

Apple has been adamant about its approach to collecting users' data via Apple Pay. "We are not in the business of collecting your data," said Apple exec Eddy Cue when introducing the service in September. "So when you go to a physical business and use Apple Pay, Apple doesn’t know what you bought, where you bought it, or how much you paid for it. The transaction is between you, the merchant, and your bank."

Payments account for 80 percent of interactions between banks and customers

While it's unclear exactly what the nature of these concerns are, The Telegraph also notes that some banking executives fear that Apple Pay could serve as a "beachhead for [Apple's] invasion of the banking industry." A recent report by consulting firm McKinsey came to a similar conclusion, noting that payments dominate customers' relationship with their bank, accounting for 80 percent of all interactions and so providing "a superb platform... for cross-selling other financial services."

"It is nonbank attackers, ranging from large telecommunications companies to small and nimble technology players, that are defining the standards for digital banking," said the report. "For now, the payments business remains squarely within the core bank franchise, but attackers such as Google, Apple, and PayPal threaten critical sources of revenue."

Concern from the UK over data collection and financial cross-selling could prove influential in other markets. The UK is fairly advanced when it comes to the use of new payment types and is home to 350,000 of Europe’s 1.5 million contactless point of sale terminals. For every compliant terminal in the UK there are also 200 contactless payment cards in use — compared with a ratio of 600:1 in the US. Although Apple apparently has no problem working with banks in the US (a recent update means it now supports 90 percent of US credit card payments by volume), objections from the UK's financial sector could stir up trouble elsewhere in Europe.