Will they or won't they? Banks play up their role in the payments drama

Can you keep up? These days the payments space resembles a soap opera where consumer-bank-device relationships swap with as much regularity as prime-time TV dramas. Here's a quick update on three important plot developments: firstly the announcement of a new partnership between mobile software business Zapp and some of the biggest UK high street names, writes Peter Springett

Can you keep up? These days the payments space resembles a soap opera where consumer-bank-device relationships swap with as much regularity as prime-time TV dramas. Here’s a quick update on three important plot developments: firstly the announcement of a new partnership between mobile software business Zapp and some of the biggest UK high street names, writes Peter Springett

The banks partnering with Zapp include HSBC, Santander, First Direct, Nationwide and others.

Simply put, Zapp enables users to pay for online and real-world goods and services with their smartphones using a unique passcode for each transaction. Think of it as two-step verification where the mobile device replaces your bank card and the one-off code, sent to your device, is a highly secure pin.

It might sound a bit familiar, but Zapp is promoting the integration of its software with banks’ existing apps. This means that when authorizing payment, customers can view all their accounts and choose the one to debit — a handy way to avoid tipping accidentally into the red.

Reading the future in your palm

Zapp is the main story today, but we’ve also seen reports from CES 2014 of a palm scanner, developed by Fujitsu, that’s being used in China and Brazil to authorize cash withdrawals. The system takes advantage of the fact that vein patterns on palms are unique, like fingerprints, but much harder to copy.

Finally, we’ve been tracking ‘Pay with a Tweet’, a system where online retailers ‘charge’ for a product by asking the buyer to send a tweet recommending the purchase to their followers. It sounds like a good idea, but not everyone agrees.

All these stories have critical implications for banks’ future role in the payments ecosystem. Zapp sees banks asserting themselves in the mobile arena. Meanwhile the future of bio-metrics be it fingerprints, palm or iris scanners remains unclear — surely an opportunity for traditional financial players to seize the initiative.

As for Pay with a Tweet, crude as it might seem at present, it serves to warn of a future where the divide between the have and have-nots takes place along social, as well as financial lines.

In short, there’s much to play for but time is running out. 2014 is the year when mainstream banks will need to decide whether they want to be the leaders, or merely followers, in the payments space.