High street banks unveil Zapp mobile payments system

VocaLink has today unveiled a new mobile payment service backed by the UK's major high-street lenders, which provides the infrastructure behind Bacs, Direct Debit and Mobile Top-Up.

Mobile use: Zapp payment system is unveiled
Mobile use: Zapp payment system is unveiled

VocaLink, which is owned by a consortium of 18 banks and building societies, including Barclays, RBS, Lloyds, HSBC and Santander, has named the service Zapp and set up a web page touting its advantages to businesses and individuals at zapp.co.uk.

Zapp is expected to launch to consumers in 2014. It will allow smartphone users to make instant, secure payments from their bank account via their mobile banking app and will bridge ecommerce, mcommerce and extend into payments made directly in a retail environment.

Despite still being a relative novelty, with limited uptake, mobile payments are already highly competitive, although Zapp feels that it is uniquely placed to drive its adoption and growth in the UK.

Justin Basini, chief marketing officer of Zapp, said: "There are lots of players in this space but nobody has really been able to capitalise on the mobile payments opportunity. We are the only ones who are aligning the interests of the three major stakeholders: the financial institutions, the retailers and the consumers and that puts us in a unique position."

Unlike some existing apps, Zapp will be bank-agnostic and will come pre-installed as an area within the major banks' own mobile banking apps, rather than requiring a separate download. In addition, Zapp is system agnostic and will work with NFC, QR codes or via one-time tokens, where the user enters a transaction code to initiate the payment.

The service, which has been developed with £16m of funding from VocaLink, will need up to £100m of funding ahead of next year's launch, to be raised by selling stakes of up to 10% to retailers, utilities providers and mobile phone operators.

Basini said: "We're looking to bring in shareholders that can benefit from the mobile payments eco-system, so financial institutions, retailers and merchant acquirers, like WorldPay.

"We're focusing on the UK at the moment, but if it's successful here, then we will look at rolling it out internationally."

Basini said the focus of Zapp's marketing strategy was currently B2B but that it would start rolling communications out to consumers to tie-in with the 2014 launch to educate them on what Zapp is and how to use it within their mobile banking app.

He added that this would probably involve working with an agency or agencies to develop Zapp's go to market strategy, although he declined to comment on when the corresponding tender might go out.

VocaLink processes more than 90% of UK salary transfers, more than 70% of household bills and almost all state benefits. Last year its systems handled 9.6 billion payments worth a total of £4.5tr.

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