There has been much made of Europe securing a third debit scheme for processing card
transactions and creating a viable competitor to break the duopoly of Visa and MasterCard. However, despite EAPS, attempts have thus far been lukewarm, despite some fairly hefty sums of money going into the various projects.
Now, in the UK, a new battle line is being drawn – and instead of the hype and fanfare experienced in the past, this one is being waged with subterfuge and cunning.
In the last year or so there has been a lot of interest in Barclays Pingit. In an interview with David Chan, CEO, Barclaycard Europe a year ago, he told PCM that the team developing the mobile P2P app had taken the approach of a start-up. A tough job considering the surrounding confines. Nonetheless Pingit has been launched and has had some great success stories, including 1.5 million downloads and over £10 million sent so far.
Across London to the offices of VocaLink who have been very busy indeed. Not satisfied by having been selected by the Payments Council to build a central database that will allow customers to link their mobile phone number to their account details, regardless of who they bank with, white-labelling the service to UK banks and building societies before the end of this year as a platform for them to build their own competitive service for their customers, they have also built and launched Zapp – officially as two separate initiatives.
Now it gets interesting. Mobile payments have long been the poster boy for the payments industry, but they have as yet failed to ignite the same interest with the public as they have within the industry. Now both Barclays and VocaLink have a relevant offering that works both in the consumers’ eyes (see Pingit download rate) and, more importantly, in the eyes of the merchant.
“If I walk into a shop and my options are Visa, MasterCard, Zapp or Pingit the merchant is going to actively push either Zapp or Pingit depending on who their acquirer is,” explains a source that is familiar with both systems. “Barclaycard will acquire Pingit transactions and WorldPay will acquire Zapp transactions and that accounts for about 70% of the UK acquirer market. Look at the recent press release from WorldPay and Zapp where it clearly states: the strategic partnership between Zapp and WorldPay commits both organisations to working together to make Zapp available to merchants in 2014.
“The merchant will love it because they will not have to pay any interchange and the acquirers will love it because they do not have to pay the schemes as the money comes direct from a consumer’s bank account using, in the UK, the Faster Payments network which is run by VocaLink,” continues the source.
Now, leaving aside the potential to abuse power handed to VocaLink by the Payments Council, there are concerns that Zapp has overstepped the mark and have presented themselves as an industry-backed solution from VocaLink.
This has raised complaints from a number of banks; most vociferously it is understood by Barclays. The point is, the mobile payments database commissioned from VocaLink is an industry-backed, industry-wide initiative…Zapp is not.
One of the big issues with high street mobile payments is that the companies launching the products have no idea if the consumer or the merchant are happy with multiple payment methods (imagine every single high street bank having its own Zapp) or if there should be a single standard that allows both merchants and consumers a simple interface to transact with.
Clearly, through comments made previously in the year, Zapp feel that a single standard is the way forward and they should be it. “We are bringing an industry-wide solution which in my view is of great value to merchants. Think how confusing it is to deal with different apps from different banks – we bring a solution to it,” said Peter Keenan, CEO, Zapp in a City A.M. interview last month.
The reality is that with the combined power of Barclays, WorldPay and VocaLink, the UK is edging towards a mass market proposition that consumers and merchants might actually use because it gives the correct weight of merchants and consumers…an issue which has lead to many a fine piece of technology being forced into the technology graveyard.
Furthermore, if a mass market mobile payments initiative takes place which does not use the traditional rails, and is instead based on the Faster Payments system, it will have considerable ramifications for the UK payments market at large. The creation of a third scheme and the disintermediation of the banks and card schemes by one of their own. Et tu, Brute?
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