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Apple Pay and Zapp make Mobile Payments in the UK a reality – who will win?

As recently reported by Worldpay the U.K. market is at a tipping point for contactless. This means this market is ripe for mobile payments. With U.K. consumer adoption of iPhone being over 40% of all smartphones, we will see in the coming months a huge groundswell of uptake in U.K. mobile payments. And launching next month?! With 8 banks?! And 250,000 merchant locations?! And you can load rewards too?!  Boom!

And what about Zapp? As we know, some of the same U.K. banks are also working with Zapp which is 100% owned by VocaLink, which is in turn 100% owned by the U.K. banks. Zapp has positioned itself to help the U.K. banks counter potentially disintermediating mobile payments services. With the media circus that surrounds an Apple product announcement, I’d expect Zapp to be hot on the heels of such an announcement with launch plans of their own, thus capitalizing on what is, in essence, simply “payments through your mobile”.  

The main difference to the consumer is that Apple Pay is offered directly from the iOS, vs Zapp being a part of the bank’s own wallet. Also, Zapp uses the UK’s Faster Payments network as the rails, argued by some as “the way forward”.

This probably doesn’t matter to the average Joe wanting to make a mobile payment, unless of course they want to use their credit card (Zapp doesn’t support credit cards). But the question remains, will this drive additional value into the places that will support continued adoption and usage? You’d certainly expect Zapp to be cheaper given its award winning payments disrupting innovation actually reduces “snouts at the trough”, rather than increasing said “snouts”.

In any event, the battle ground is set, or will be when Zapp sets its go-live date. The banks will surely go with Apple Pay, but I’d also expect them to go with Zapp too. With Android Pay to follow later, and maybe Samsung Pay a little later after that, the banks are in prime spot to take part, learn and grow experience in innovating in payments. For banks, this will be a much needed capability given the challenges and opportunities that will be confronting them in the years ahead.

By the end of 2015 the banks will have data that will let them see where consumers are putting their vote of confidence. With multiple Host Cloud Emulation (HCE) style pilots happening around the globe a bank-branded mobile wallet is certainly going to be getting tested out; the bank wallet is something that Zapp and HCE have in common. But Apple Pay is seen by a lot of people as the most elegant of the mobile solutions. So the jury is out on which will win out, and by what margin.

With all of this fast moving complexity, the challenge to the banks is clear; they need their technology to be agile, nimble, able to adapt quickly to changes in this space, and able to support the emerging standards now.

We’ve all said this at one time or another, and its true again today, the banks need to be future proof. Doing this with aging systems can be a challenge, but not impossible, and solutions to this complexity do exist in the market today.

Practice Lead, Real-Time & Digital Payments

Dean has been in the solution space for over 20 years. Initially starting out at IBM as an IT architect consulting to cross-industry blue chip clients, it was at IBM where, as lead integration architect on an ePOS chip & PIN replacement programme for a leading UK retailer, Dean caught the cards and payments bug. Following IBM, Dean moved 100 percent into cards and payments solution consulting and product management leadership within TSYS, and later with Vocalink. At Vocalink Dean was head of product for what is now known as Pay By Bank App, combining faster payments with mobile payments to replace plastic cards to buy goods (a precursor to PSD2). At ACI Worldwide, Dean has held various product leadership roles covering consumer and merchant management, clearing & settlement, reconciliation, dispute management, mobile payments and now immediate payments and hub solutions. With this latest addition Dean is working with global partners to support the transformation of payments into a digitally-native, real-time industry, supporting any payment, every possibility.

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