Banks finally look ready to adopt mobile payment options and Zapp is heading up the transition.
Zapp, a mobile payments app that works directly with banks to have money come straight out of your bank account is set to launch later this year in the UK, with support from HSBC, First Direct, Nationwide, Santander and Metro Bank. Understandably, this is quite a big deal in the world of mobile and digital payments thanks to these banks holding 35 per cent of all current accounts in the UK, totalling 18 million customers.
While this is somewhat akin to Barclays’ Pingit application, Zapp – produced by Vocalink – is far reaching and works for more than just peer-to-peer payments and transfers.
At first Zapp will only be available to customers wanting to pay online, in-store payments won’t arrive until the tail end of 2015. But, seeing as Vocalink has sunk £33m into producing the app, it’s more than likely that waiting until 2015 will be worth it.
But why the wait until 2015?
Largely, it’s because of a highly-fragmented market in in-store payments. After all, there are hundreds of different mobile and digital payments apps, some sit as MPOS applications for merchants, others are peer-to-peer and some are ubiquitous like PayPal. You can pay via NFC, QR code, mobile phone numbers, emails addresses, it’s just all very confusing for the consumer – it’s not as simple as Chip and PIN is in terms of being instantly recognisable. Customers just aren’t using the technology enough at the moment, despite reasonably high numbers of people having the ability to make such payments.
Granted, it looks as if NFC will be the winner in the next-generation of payments technologies – especially if Apple decide to adopt the technology – but because of the varying uses of tech, Vocalink have decided to hold back retail unit roll out so it can perfect integration into POS devices properly.
Still, we have to remember that, while this is a really big move for the mobile and digital payments markets, it ultimately means nothing right now. It may well have a potential user base of 18 million on launch, but what will convince those to switch to using it? Current evidence around the systems benefits all point to retailers saving money on card transaction fees and banks ensuring fraud and cash handling costs drop too – but so far the benefits to the customer seem slim.
At least, slim enough for them to be nonplussed about making the most of Zapp.
Perhaps banks, retailers and Vocalink should put the customer first in creating a digital payments application? Either way, Zapp’s arrival definitely signifies a wind change in the UK banks attitude to digital, and it’s one I welcome with open arms.