VocaLink, the UK’s national payments provider, have announced the launch of a Zapp, a brand new company bringing a new mobile payment system to the market.
Zapp will give people direct access to the money in their existing bank accounts through their mobile phone and real-time payments, with transactions processed by linking mobile phone numbers to bank accounts.
VocaLink is collaborating closely with a significant group of stakeholders including financial institutions, merchants, merchant acquirers, billers and telcos, to set up, build and deliver a new framework for ‘Zapp’ mobile payments. This proposition will put the UK at the forefront of payments innovation globally.
Who are VocaLink?
VocaLink design, build and operate world-class payment systems and ATM switching platforms and operate the UK national payments infrastructure. In 2012 they processed over 10 billion UK payments with a value of over £4.5 trillion.
VocaLink’s payment services touch the lives of almost every person and business in the UK. They process over 90% of UK salaries, more than 70% of household bills and almost all state benefits. VocaLink technology powers the Bacs and Direct Debit schemes as well as connecting the world’s busiest network of over 65,000 ATMs through the LINK scheme.
VocaLink also provide the infrastructure for the Faster Payments Service which enables almost instant payments between bank accounts including payments to and from your PayPal account.
Will Zapp be a PayPal killer?
Yes and no! It’s very unlikely to be widely used on eBay where PayPal is the defacto standard around the world. PayPal have over 128 million active accounts in 193 markets and 25 currencies around the world and make international transactions just as quick and easy as domestic UK transactions.
However Zapp isn’t aiming to grab your eBay payments, they’re aiming to make it as easy to pay in the local supermarket with your mobile as it is today with your debit card. Zapp will be faster – moving money instantly from your bank account to the business you are paying.
Zapp will work as seamlessly offline as it will online – you’ll be presented with a 6 digit code at the online checkout or for offline payments on the retailers terminal. Simply enter that into your banks Zapp app on your smartphone and the payment is completed. In fact Zapp may be better for offline payments as facilities such as PayPal don’t just handle payments, crucially they also remember your name and shipping address details and for mobile users these are just as troublesome to enter as a credit card number.
Where PayPal will face stiff competition is in offline payments. Whilst we know PayPal Here and a load of other innovations are coming in the UK I’m yet to see any indication of widespread retailer adoption (or even widespread availability of PayPal solutions that retailers could adopt!). PayPal isn’t ready for the high street, if they’re not quick we could all be Zapping at the supermarket and PayPal could find that too big a competitor to compete with.
Zapp will be launched to the financial institution and merchant communities by the end of 2013, with consumers able to use the service early next year.