Banks Unveil New Mobile Payments Service Zapp

Written By Unknown on Senin, 24 Juni 2013 | 18.56

By Mark Kleinman, City Editor

A new mobile money system that could broaden ownership of one of the fastest-growing areas of the financial services industry is to be unveiled days after a damning report criticised big banks' stranglehold on Britain's payments infrastructure.

Sky News understands that VocaLink, which is owned by the major high street lenders, will on Tuesday announce the creation of Zapp, which will allow consumers to make instant payments from their bank accounts using only their mobile phone numbers.

Launching to consumers early next year, Zapp will enter an increasingly-crowded space as banks and technology providers rush to introduce new payment mechanisms.

The Zapp concept has been developed with £16m of initial funding from VocaLink and its shareholders, but will require up to £100m to finance its launch in 2014.

Retailers, mobile phone networks and merchant acquirers will be invited to acquire stakes of up to 10% in Zapp, which is to be run by Peter Keenan, a former executive at HSBC and the electrical goods retailer Currys.

VocaLink's systems process more than 90% of UK salary transfers, more than 70% of household bills and almost all state benefits, while its technology powers the Bacs and Direct Debit schemes.

Its involvement in the launch of Zapp is viewed by senior bankers as a crucial way of demonstrating to the Government an industry-wide commitment to accelerating payments.

In its final report last week, the Parliamentary Commission on Banking Standards called for more work to be conducted on measures to bolster competition in retail banking, and included recommendations that banks should relinquish control of the payments network and of a fuller investigation of the merits of bank account portability.

"The current arrangements, whereby a smaller bank can only gain access to the payments system via an agency agreement with one of the large banks with which it is competing, distort the operation of the market," the report said.

"The Government's proposed reforms will, however, continue to leave ownership of the payments system largely in the hands of the large incumbent banks.

"Continued ownership of the payments system by the large banks could undermine the proposed reforms, in view of the scope such ownership gives them to create or maintain barriers to entry.

It added: "The Commission therefore recommends that the merits of requiring the large banks to relinquish ownership of the payments system be examined and that the Government report to Parliament on its conclusions before the end of 2013."

The new Zapp service will work by linking a bank account to a mobile phone number, and would, VocaLink believes, help small businesses by speeding up payments at a time when many entrepreneurs are being held back by cashflow problems.

Some banks have already launched their own instant payment services, including Barclays' Ping-It application. Zapp would go much further by introducing a single system across the industry, and is expected to be backed by all of the major high street banks.

David Yates, chief executive of VocaLink, told Sky News that Zapp would assist with policy-makers' objective of "speeding up the UK economy as we get back to growth".

The company says its systems are involved in processing every interbank payment in Britain, last year handling 10 billion payments worth nearly £4.5trn.


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