3 Technologies that Could Change How We Pay for Things in the UK Forever

PaymentMovie All Is Lost (2013)

Sometimes, little things make a big difference.

That’s how it is with paying for stuff.

Paying with an Oyster card on the London Underground is soooo much nicer than fiddling about with change or a debit card to buy a paper Travelcard.

And checking out with Amazon’s one-click checkout is soooo much easier than typing in a credit card number. (Possibly too easy at times — just see my book collection.)

Compared with these slick payment methods, lots of other payments are still relatively painful:

  • When paying at an in-store checkout, you often still need to slot in your debit or credit card (that you need to have with you) and tap in a PIN.
  • When paying online, you often need to type in a 16-digit credit or debit card number, expiry date and CVV.
  • In both cases, the merchant ends up paying a fee of around 1.5% to 2% to a card network.

These technologies may soon change that.

1. Zapp

What is Zapp?

Zapp is a payment technology that is looking to compete with the likes of Apple Pay and PayPal. And it could be a step towards making credit cards redundant.

How Does Zapp Work?

As a customer, you’ll use Zapp through a mobile banking app on your phone. When you’re at a physical checkout, you’ll have a special code sent to your phone. You’ll then authorise the transaction with a tap of your finger.

Alternatively, you’ll be able to scan a scan a code into your phone from a bill in a restaurant or the screen on a card machine.

Unlike with credit or debit cards, Zapp won’t share any sensitive information with the retailer, such as credit card numbers or expiry codes. Instead, Zapp will use a unique code for each purchase that will expire after a few minutes.

Zapp’s technology can also enable online transactions in a similar way.

Here’s a short video showing how it will work:

Who is Backing Zapp?

Large retailers including Sainsbury’s, Asda, and lenders including HSBC, First Direct, Nationwide, Santander and Metro Bank.

When Can I Use It?

Zapp is due for launch in early 2015.

2. Apple Pay

What is Apple Pay?

Apple Pay is the payment system on Apple’s recently-released iPhone 6 and iPhone 6 Plus. It’ll also be available on the forthcoming Apple Watch. It uses the NFC communication standard to allow the mobile device to talk to a payment terminal.

How does Apple Pay work?

You wave your device over a contactless card reader, then press a finger on your device’s TouchID button to authorise the payment.

Who is Backing Apple Pay?

First, of course, Apple! With around a billion iOS devices sold around the world, there’s a huge number of relatively affluent consumers ready to use this new payment technology if and when retailers support it.

On the retailer side, Apple claims there are now 200,000 outlets in the US that take Apple Pay payments. Companies supporting it include Disney Store, Foot Locker, Macy’s, McDonald’s, Nike, Office Depot, Subway, Toys R Us and Whole Foods Market. It’s also supported by popular apps including Groupon, Hotel Tonight and Uber.

We don’t yet know who’ll support Apple Pay in the UK when it launches here.

When Can I Use It?

Apple Pay has just been launched in the US (with a few teething problems) and is due to launch in Europe in 2015. As yet, no specific date has been announced.

3. Paym

What is Paym?

Paym is a way to send money to people you know, using your mobile phone.

How does Paym Work?

First, you register your mobile phone number with your bank or building society. You then use your mobile banking app to select the phone number of the person you want to send money to (they need to be registered as well).

Who is Backing Paym?

Paym is backed by the UK’s Payment Council, the body with responsibility for ensuring that payment services work in the UK. The underlying service is provided by a company called VocaLink.

Paym has been supported by Bank of Scotland, Barclays, Cumberland Building Society, Danske Bank, Halifax, HSBC,Lloyds Bank, Santander and TSB from its launch in April 2014. Since launch other banks have added support for it, and the vast majority of UK current accounts now support Paym.

When Can I Use Paym?

As long as your bank has Paym support, you can use it now!

What’s Next for UK Payments?

For a new consumer to retailer payment technology to succeed, it needs to get a critical mass of retailers and consumers to adopt it. If too few retailers support it, consumers won’t bother using it. If too few consumers are using it, retailers won’t bother getting set up to accept it.

For now, it’s too early to tell whether Zapp or Apple Pay will take off in the UK. We should find out in 2015.

Paym has a slightly different, perhaps easier, challenge in that it doesn’t need retailers to be successful. According to figures released by the Payment Council in August 2014, £6.5 million had been sent using the service by that time, and the millionth person registered to use it on 31st July 2014. That’s a good start, but still a long way from widespread adoption.

What other payment technologies do you think are the most exciting for the UK over the next year?

photo credit: Magnus D via photopin cc

Braintree Payments Launch in UK

Braintree

Braintree, a well-funded US payment processing company, has now launched a UK service.

Braintree offer a payment gateway with a good range of features that has become popular amongst trendy technology startups in America. They are known for having a developer-friendly API that makes it relatively easy to integrate with websites.

The company received $34 million in venture capital funding from Accel Partners in 2011. I expect them to quickly grab mindshare here in the UK with our local technology startups and to expand from there to more mainstream merchants.

Braintree recently acquired mobile payments company Venmo, so look out for some interesting mobile offerings from them, too.

Personally, I think the arrival of companies like Braintree is a great thing for UK merchants as it will give extra encouragement to existing payment gateways to improve their APIs and over all service.