Apple Pay and Zapp: 2 key entrants about to make Mobile Payments a UK reality - who will win?

So, as of June 8th 2015 , 18:45 BST, Apple (Pay) is coming to the UK. And so they should! As recently reported by Worldpay [link] the UK market is at a tipping point for contactless. This means this market is ripe for mobile payments. With, according to The Telegraph, UK consumer adoption of iPhone being over 40% of all smartphones [link], we will see in the coming months a huge groundswell of uptake in UK 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 UK banks are also working with Zapp (100% owned by VocaLink, who in turn are 100% owned by the UK banks), a service launching to help the UK 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 [editorial update: it happened! link], thus capitalizing on what is, in essence, simply “payments through your mobile”.  

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 it to be cheaper given that Zapp, an award winning payments disrupting innovation (link) actually reduces “snouts at the trough”, rather than increasing said “snouts”.

In any event, the battle ground is set (or will be soon when Zapp sets their go live date). The banks 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; a much needed capability given the challenges and opportunities confronting the banks in 2015 and beyond. By the turn of the year the banks will have data that will let them see where consumers are putting their vote of confidence. With multiple 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.