The Payments Council has announced that its new payments system, potentially linking every current account in the UK via a mobile number is to be called Paym and will be available from April. Except it probably won’t as banks will have to incorporate this into their systems themselves. Billy Bambrough takes a look at the new consumer payment tool for the UK
If I had spent a lot of time and money developing a mobile payments system which was the envy of banks around the world and was then told that all banks in my core market would be get¬ting the same service effectively for free I would be unhappy to say the least. This is precisely what has happened to Barclays whose lauded Pingit app is about to be undercut by a national service.
Despite slower customer adoption than the bank would have liked, Barclays should be very proud of everything that it achieved with Pingit. We certainly wouldn’t be looking at the possibility of linking every current account in the UK with a phone number in the next two years without it.
The service has garnered rave reviews and far fewer disgruntled customers than such a novel system deserves (espe¬cially one that was created with the approach of a start-up within a global bank – who would have thought that could ever work!?). Although, while an industry darling and poster boy for UK banking innovation Pingit has been far more popular with bankers than it has with customers, with 2m downloads and £10m ($16m) sent so far.
So what happened? Why has Barclays not enjoyed leading this field for the next few years, comfortably miles ahead of other high street lenders and able to laugh as they scramble to keep up?
Wel l , in a word, Zapp happened. Vocalink built it and managed to get a few banks involved, giving it their support and certainly making it look as though a fair few high street banks were involved. Originally Zapp was going to include a P2P option via a mobile number, à la Pingit. If it had, Zapp would be looking much more like a Pingit competitor than it currently is.
Instead, The Payments Council agreed with Vocalink that the P2P element of Zapp would be made available separately to all UK banks but remain running on the Vocalink infrastructure (without any Vocalink involvement I am assured).
Whi le Paym is of ficial ly endorsed by each of the banks, Zapp is no such thing – having only HSBC, Nationwide, Santander, and Metro Bank signed up. This raises the question of whether Zapp is now considered the UK official mobile payments app by association with Paym?
It doesn’t end here. The reason for Barclay’s annoyance will be more than just frustration over other banks enjoying the spoils of its success after such a short time in the sun. As we can see here the company picking up the acquiring fee from Zapp is World¬Pay, not, as with Pingit, Barclaycard.
If the options you have to pay are by card, Zapp, or Pingit the store will almost certainly prefer you to pay by Zapp or Pingit depending on who their acquirer is (Baclaycard and WorldPay take around 70% of the UK’s acquiring market). In a press release from WorldPay and Zapp they say they will work together to make Zapp available to merchants in 2014.
This works out as a good deal for the merchant because they will not have to pay any interchange. On top of this acquirers get a good deal by not having to pay the card schemes as the money comes straight from the payers bank account using, in the UK, the Faster Payments network which is run by, you guessed it, VocaLink.
A few years ago MasterCard and Visa sat as the undisputed kings of payments. Looking at how people might be paying in 2015 the card companies don’t seem to have much of a stake in future payments. PayPal is still around but charging far too much for a P2P payment. The market was, everyone thought, the telecos to lose. They had an open goal it seems and missed.
We are in the middle of a vast shift in how P2P, consumer and international payments work. Card companies are on their way out. Telecos are already out. Bitcoin has showed us that we don’t need the banks so how long before they’re out too?
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