Clients following our payments research will know of our interest in Zapp. Zapp is a new UK payment method that utilises the Faster Payments scheme. Zapp is a way for the merchant to create a Faster Payment in the consumers device (mobile/tablet/laptop) using a wide variety of methods (bar code, SMS, QR code, etc). This provides all the relevant data – value, account details, etc. The consumer then just authorises the payment. We’re interested for a number of reasons. Firstly, as mentioned in my first real-time payments research report, there seems to be a myth that real-time payments are P2P payments primarily. Zapp is very much a way for consumers to buy things both online and offline. Secondly, there has been a move to thinking about real-time payments enabling other products, rather than just being a standalone payment method. These are known as overlay services, and a number of initiatives (Australia, Finland) have explicitly stated their desire for overlay services to be created. A few overlay services have been created for Faster Payments – PingIt and PayM for example – Zapp is by far the biggest, most ambitious, and potentially, disruptive. Thirdly, Zapp state that is cheaper than the alternatives. Implicit in this, is cheaper than cards. Zapp are very careful to ensure the language they use doesn’t imply its card like (and therefore potentially subject any regulation around fees that could be considered interchange). Yet the route to market includes using large merchant acquirers. With any new payment method, adoption is slow. Payments are a 2-sided market. You need sufficient numbers of consumers to have adopted to interest merchants – yet consumers won’t adopt something that they can’t use. Zapp has potentially half the equation solved, with large banks signed up and Faster Payments reaching 100% of UK current accounts. It was interesting to see then the announcement this week that Zapp have signed some major retailers to take part. Furthermore, these are big, household names – Sainsburys and Asda are two of the largest supermarkets in the UK. With official launch in 2015, there is still a long way to go, but the chances of success seem to improve daily.
