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* Apple Pay global expansion slowed by local paymentdifferences
* Seen likely to target countries with strong iPhonepenetration
* Australia, China, UK viewed among likely next moves -experts
By Eric Auchard
FRANKFURT, April 8 (Reuters) - Apple has mademobile payments look easy, after a decade of mostly failedexperiments by banks, telecom operators and retailers to wooconsumers away from cards and cash.
Apple Pay has taken the United States by storm since itslaunch in September, and the company has said it alreadyaccounts for around $2 out of every $3 spent using "contactless"payments on the three big U.S. card networks.
But the tech giant will need a whole lot more magic as itlooks to extend the service to international markets.
Unlike the consumer electronics business where Appleregularly rolls out new computers or phones in dozens ofcountries at once, there is no such thing as a unified paymentsmarket.
Each country is inhabited by often warring banks, creditcard associations, telecom operators and retailers, whilepayment preferences and regulatory regimes can vary widely.
"Every market will have different local players, differentpartnerships, different local standards, different economics,different levels of cooperation," said Morgan Stanley technologyanalyst Andrew Humphrey.
Apple Pay allows consumers using new Apple phones, tabletsand smartwatches to buy goods by simply holding the device up toreaders installed by store merchants. Its potential globalcustomer base is huge: the 800 million Apple users who havealready connected credit and debit cards to iTunes accounts.
But industry executives and analysts say that as the SiliconValley firm gears up to push into a handful of new markets inthe Americas, Asia and Europe this year, it must step gingerly,one market at a time.
It is expected to turn to preferred partners in newcountries rather than the broad coalition of financial serviceplayers it managed to assemble at home, where the contactlessmarket is relatively new, they say.
"Apple doesn't need blanket coverage to start," MorganStanley's Humphrey said. "(It) can negotiate with a smallernumber of banks in each market."
Industry experts say the most likely targets are advancedmobile markets such as China, Japan and Britain, and aggressiveadopters of new payments systems like Australia, Poland and, toa lesser extent, Canada.
"Apple, being Apple, will force its way in," said AndrewGardiner, European technology hardware analyst for Barclays.
"The expectation in the industry is that Apple will belaunching in new markets in the next quarter or two," he says,citing conversations he has had with credit card companies andmajor banks in Europe.
ALTERNATIVES TAKE SHAPE
Apple itself is not giving any clues about where it mightmove next. "Apple Pay is available in the U.S.," the officialsite simply states. A spokesman declined to comment on plans forinternational expansion.
An Apple Pay strength - that it seamlessly services Appleusers - also gives its rivals room for manoeuvre, given thatiPhones account for less than a fifth of the smartphone market.
In recent months, dozens of new investments and acquisitionshave taken place, led by Google's takeover of telecomoperator-backed Softcard and smartphone giant SamsungElectronics' purchase of magnetic strip credit cardpayment service LoopPay.
Both Google and Samsung look poised this year to have theirown beefed-up mobile payment offerings to compete with Apple Payas they seek to deny Apple a key differentiating feature todrive sales of its latest phones and smartwatches, analysts say.
Meanwhile, major banks are looking to offer "mobile wallet"payment apps of their own, using some of the same securitytechnology popularised by Apple. Many financial institutionsfear Apple Pay may one day overshadow relationships with theirown customers.
Credit card companies such as Visa and MasterCard - which provided crucial early backing to Apple Pay andare gearing up to support its international expansion - are alsolooking to hedge their bets and back viable alternatives.
Analysts say Apple is likely to go after markets whereiPhones are already popular and where wireless payment readersusing technology on which Apple relies are widely available.
Timetric, a London-based financial services research firm,says for example that Germany, where there is relatively lowiPhone usage and only a third of consumers own a credit card, isan unlikely next stop.
"Innovation in payments is not viral like other types ofInternet markets," said Jean-Claude Deturche, senior vicepresident at Gemalto, the world's largest maker of mobile SIMcards, a rival mobile payment mechanism.
"It takes a bit of time. It is down to hard things. It is aphysical market, not just a digital one." (Additional reporting by Adrian Krajewski in Warsaw; Editing byPravin Char)
