UPDATE 1-Apple Pay launches in Britain as hold-out Barclays signs up

* Payments service will be available at 250,000 outlets

* UK tap-and-go payments have surged in recent years

* Apple Pay says Britain could become its biggest market (Adds detail, Apple executive comments, background)

By Eric Auchard

LONDON, July 14 (Reuters) - Apple introduced itsmobile payments service to Britain on Tuesday as Barclaysconfirmed its participation in the U.S. tech giant's move tocapitalise on the increasing number of consumers who arecomfortable making tap-and-go purchases.

A quarter of a million outlets will offer Apple Pay, fromLondon Underground stations to coffee shops, retailers andtravel businesses, making it more widely available than when itfirst launched in the United States last year.

Tap-and-go payments have surged in recent years, withgrowing acceptance among banks, retailers, card issuers andconsumers, but the real tipping point in Britain came with theLondon Underground's introduction of "contactless" paymentmethods.

"We actually think that the UK can be our leading market forApple Pay, given the unique characteristics (of the market),"said Jennifer Bailey, vice president of Apple Pay.

Convenience, as ever, is key and Apple says its new serviceis even quicker than rival contactless payment options. Set-upis via an Apple app on an iPhone 6 or late-model iPad. Customersuse the built-in camera to scan an image of their credit ordebit cards and then confirm their details by text message,email or a phone call from their bank.

To make payments, customers hold their phone, tablet orApple Watch near a merchant's existing contactless terminalwhile touching the mobile device's fingerprint ID button ordouble-tapping the watch face.

The beauty of the scheme for Apple is that it offers anotherway to bind customers more tightly to its phones, tablets andwatches, while also taking a small slice of the bank transactionfees on each payment made.

RESISTANCE FADES

Apple Pay will eventually be supported by all major Britishbanks. The last hold-out, Barclays, confirmed onTuesday that its customers will be to use Apple Pay in thefuture. HSBC Holdings will offer Apple Pay later thismonth and other major banks have said they will introduce it inthe autumn.

In the meantime, 70 percent of all credit and debit cardswill accept Apple Pay, including cards offered by MasterCard, Visa Europe and American Express. That figurewill top 82 percent once Barclaycard is ready, Bailey said.

"We have been surprised that so many banks have signed up tosupport Apple Pay," said Benjamin Ensor, an analyst at ForresterResearch. "It's worth asking what Apple Pay brings that thebanks can't do themselves."

His answer is that Apple has managed to win over banks,retailers and even telecoms network operators that had refusedto cooperate with one another for similar services.

Ensor, however, has yet to be convinced that Apple Pay willwin both the hearts and minds of customers in the way thecompany's other products have.

"Are people crying out for a really different method ofmaking payments? I think that's not yet clear," he said."Consumers just want to buy stuff."

Apple has played its part in that respect, winning supportfrom London Underground and retailers including pharmacy chainBoots, Costa Coffee and supermarket chains Marks andSpencer and Waitrose.

LOYALTY LESSON

The U.S. company had learnt from Apple Pay's launch in itshome market last October, when a number of major chains pushedback because the service did not work with the customer loyaltycards that many retailers rely on to collect customer data.

Last month Apple said it would begin accepting private-labelcredit cards and that retail chains can work with the company toupgrade their loyalty programmes to work with Apple Pay.

"We are actively working with UK retailers on loyaltyprogrammes," Bailey said.

Analysts said that while contactless payments have caught inLondon, adoption has been slower across the country. However,Apple said it was working with retailers and e-commerce sites tosupport take-up.

No credit card information is stored within Apple Pay,reducing vulnerability to hackers. It also relies on higherlevels of user identification, such as fingerprints.

"With multiple levels of security, it's designed from thebeginning to be more secure than a credit card," Bailey said.

But for all its efforts in the United States and Britain,the speed with which Apple has expanded in consumer electronicsthrough international product launches will be hard to matchwith Apple Pay. The service does not benefit from a unifiedglobal payments market and will have to launch country bycountry.

"We are actively working on expansion plans," Bailey said,but she declined to comment on reports that China, South Koreaand Canada could be among the next target markets. (Additional reporting by Sinead Cruise and Steve Slater inLondon and Julia Love in San Francisco; Editing by David Clarkeand David Goodman)