Analyst View: Mobile Heats Up Real Time Payments

With the planned roll-out of ‘Real Time Payments’ in Australia by 2016 and high levels  of interest in immediate payment infrastructure in other Asia Pacific countries such as Singapore, the upcoming launch of mobile platform Zapp in the UK provides an indicator of how these systems might affect wider mobile and e-commerce developments.

Gilles Ubaghs, Senior Analyst, Financial Services Technology, Ovum comments:

“Zapp builds on Vocalinks Faster Payments infrastructure and enables merchants and banks to bypass the existing payment schemes like Visa and MasterCard by enabling immediate bank transfer payments at the POS for both real world and digital environments. For merchants this poses potentially great benefits in terms of reduced interchange fees and substantially faster if not immediate payment settlement.  For consumers on the other hand, the benefit for e/m-commerce remains significant as it effectively provides a simplified payment mechanism without the need to create a new and separate wallet distinct from their existing mobile bank accounts, and avoids the need for fiddly and unnecessary virtual prepaid wallets separate from other accounts. In-store payments may take longer to get off the ground as merchants and consumers alike adapt to a device based system whereby the merchant essentially authenticates itself to the consumer.

However with Vocalink reportedly opening up its API to developers, there remains strong potential for Zapp to innovate and develop in ways that may gain greater consumer traction. Critical to the long term success of Zapp will be the users experience and also gaining consumer awareness of the platform. The involvement of participating banks will go some way in helping this; however as the recent roll out of contactless showed, this may nonetheless be a long-tail growth pattern rather than an overnight revolution. Alongside this with more countries and regions developing faster payments like infrastructure, if Zapp proves successful in the long term it could prove to be a model for other markets across Asia Pacific and indeed globally. Visa and MasterCard will likely be watching these developments closely.”

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