While 2013 was all about contactless payments, 2014 might become the year of cardless payments. The next step towards a fully digital wallet is on its way this autumn, and a host of Britain’s banks have already signed up to use it.
The Zapp mobile payment service will allow customers to make payments in-store and online using their smartphones and tablets. The firm describes itself as ‘the simplest and most secure way to pay’.
The versatile service uses near-field communication technology in stores, allowing shoppers to tap their smartphone on a contactless terminal to make a payment in the same way as a contactless card.
It can also be used for shopping online. Shoppers using a tablet will be able to access the app directly, while online merchants will be able to send a notification to a user’s phone, from which the payment can then be made.
And if customers are sent bills with QR codes, consumers will be able to scan these with their phones to launch the app and pay through their smartphone.
About Zapp: How Can It Be Used?
- In-store. Tap and pay using your phone.
- Online. Merchants will send an alert to your phone that will launch the app.
- At home. Scan QR codes to pay household bills.
- Direct link to bank account – no third parties.
- View your account balance before you make a payment.
Who Has Signed Up?
- HSBC / First Direct
- Metro Bank
- Sainsbury’s (2015)
- Asda (2015)
- House of Fraser (2015)
The company’s chief executive, Peter Keenan, claims the system is more secure than using a credit card because it takes payments directly from a bank account without the need to share details with third parties. It is these details that put people at risk if they fall into the hands of a fraudster, he says.
It also cuts out some of the cumbersome processes for users that have prompted O2 to ditch its less efficient Wallet service from 31 March.
And because it has no intermediaries, lower fees will make it an attractive proposition for retailers, the firm suggests.
Banks including HSBC, Santander, and Nationwide have already committed to integrating the software into their current smartphone apps.
The direct link to the customer’s bank account means that the service also has a useful advantage over rival payment apps. Users will be shown their account balance before they confirm a payment, which could prevent them from going overdrawn. It also allows budget-conscious users to keep track of their purchases and spending in one place.
Are We Ready For a Digital Wallet?
It is unlikely that retailers will need a great deal of persuading to take this on board. Barclays’ Pingit service has already proved a popular addition to mobile banking, while the early commitment from a host of banks and the promise of lower costs will also appeal.
Customers may need a little more persuading. A number of security flaws found in Google Wallet during its early days highlight the kind of vulnerabilities that consumers may expect to encounter during the launch of the new service. IOActive has also highlighted a number of security issues it has discovered in mobile banking apps.
Whereas contactless credit cards can be considered safer than cash because banks are obliged to refund customers in the event of any fraudulent transactions, it is not yet clear who will bear liability in the event of fraud here.
The future may be bright, but Zapp may need to address some of these thorny issues to get the security conscious onside in time for launch later this year.