Zapp snaps up Asda and Sainsbury's for mobile payment: analysis

Mobile payments provider Zapp has announced this week that Asda, House of Fraser, Sainsbury's and Shop Direct will work to introduce its technology into their retail organisations from next year.

Clarks, Dune, Spar and Thomas Cook are among the other high street names that are partnering Zapp, with the tech company's CEO Peter Keenan suggesting the commitment from such a range of retailers represents "a hugely significant milestone in the history of money in the UK".

Payment providers operating in the UK, including Verifone, Klarna, Touch Go, Siemens, Apogee International, Vix Technologies, Global Charge, Just Desire and RSL, are also working with Zapp, but there are still no firm dates for when its mobile payment technology will be ready for use in a shop environment. In addition, there are still concerns from authorities about the level of security surrounding mobile payments.

Zapp and other technology providers will be hoping that with the support of some of the largest retailers in the UK it will only be a matter of time before its technology starts to play a prominent role in the retail ecosystem, but there is a conflict of opinions from those working in the industry as to whether or not this week's news does mark a tipping point in terms of wider mobile payment adoption.

Essential Retail has gathered together a selection of opinions on the Zapp announcement, to assess what it means for wider retail industry.

Geoffrey Barraclough, retail technology expert at Barraclough & Co, told Essential Retail: "While this news is very welcome, it's emphatically not the big announcement we've been waiting for.

"Retailers have been rightly keen on Zapp from the outset but their enthusiasm is only half the story. Zapp works by pinging transactions into your mobile banking app for approval. This requires a pretty sophisticated level of IT integration between Zapp, the payment service providers and the banks.

"We've heard warm words from the banks yet we’re still waiting for any of them to commit publicly to a deadline. The banks’ development queues are full to bursting and Zapp is competing with many other priorities including and Apple Pay. Zapp deserves to succeed but I’ll be happier once I’ve seen a firm launch date."

James Frost, chief marketing officer at Worldpay UK, commented: "The high street is leading the charge for mobile payments as more retailers bank on smartphones for fast and easy sales.

"One in three people in the UK are already using cashless apps and nearly half of UK shoppers are using their phone in-store to check prices (according to Worldpay/TNS research earlier this year), with Zapp’s latest partnerships likely only to accelerate this trend. We’re not yet at the stage where shoppers will walk out the door if they can’t pay via an app, however with consumers now so inseparable from their phones, retailers are clearly realising that mobile payments will make a sound commercial investment for the future."

Guy Douglas, independent consultant at Connected Places UK, told Essential Retail: "The unprecedented acceptance of Zapp mobile payments by high street majors, as well as a significant pure play retailer means that consumers will be gently introduced to mobile payments by brands they trust; the previously lukewarm consumer response to mobile payments did not have these trusted familiar voices.

"On top of this, retailers will benefit from lower transaction costs, making Zapp a prospect for Tier 2/3 businesses as well as the independent sector., which is vital to high street vitality. Achieving this initial scale means that Zapp is likely to accelerate further the consumer uptake of mobile commerce services and add new value to the mobile channel as a whole."

David Lowrence, retail client engagement manager at Fujitsu UK & Ireland, said: "Given the proliferation in smartphone use, it is no surprise that mobile payments have seen such a huge surge. This announcement by Zapp is just the latest move in this story and continues to highlight how technology is shaping the payments industry.

"However, according to research by Fujitsu UK & Ireland, less than half (46%) of financial services organisations with a turnover of under £100 million have a mobile strategy in place. At a time when many consumers are doing a lot of their shopping online, organisations can no longer afford to be complacent about adopting mobile payments."

And what about the view on mobile payments from a high street retailer...?

Menno Rientjes, IT director at Lloydspharmacy parent company Celesio UK, told Essential Retail: "We have customers in our stores who would want to use the opportunity [to use mobile payments], but right now it is not our biggest customer retention issue compared to other retailers.

"In this case I would expect us to be a technology follower. We would rather be a technology leader in customer intimacy applications around healthcare.

"We are open to the new technology benefit, especially if the customer would like to use it, and we will follow what happens with interest."

What do you think? We are keen to hear the industry's views on mobile payments and understand what this week's announcement from Zapp means for the sector. Please feel free to add a message below or share your comments on Twitter @EssRetail.

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