Written by Technical Architecure on Friday 25 July 2014
In recent years the UK has seen some big changes in the way we pay for goods and services. Faster Payments, introduced in 2008, meant that money transfers could be done almost instantly. Using that service, financial institutions have come up with innovative ways to move personal money around. PingIt from Barclays allows you to transfer money to someone using just their mobile phone number and PayM from the Payments Council has now expanded this to a much wider range of institutions.
The evolution of payments has changed the way we buy things online. Digital wallets like Amazon 1-Click, PayPal and Google Wallet allow you to pay for things online using pre-registered cards, so all you need to remember is your username and password.
Later this year we will see the launch of Zapp from VocaLink which will bring the best of PayM and digital wallets together in one service. Rather than using a card to pay you will be given the choice to pay by Zapp and then use your smartphone to complete the transaction, with Faster Payments moving the money straight from your account to the merchant. The key to the success of Zapp will be its ability to be used for both online and high street payments.
This evolution of payment technologies has yet to make much of an impact in the world of pensions and investments. All institutions allow you to make a fixed regular investment via direct debit and most allow you to make ad-hoc debit card payments. For the most part however the technologies behind these are still stuck in the 20th Century. Ad-hoc payments are sometimes instant but on some platforms can take up to three days to credit and almost all institutions make you re-enter card details each time.
We all recognise that getting people to save is a major challenge so why put barriers in their way? Why not take advantage of the tools from the retail payments evolution and offer the services alongside the traditional offering? Some banks already offer an impulse saving facility on their smartphone apps, where you click a button and automatically move a set amount into your nominated savings account. True Potential have launched a similar facility on their investment platform. Hopefully we will see other pensions and investment platforms follow their lead. At the very least we should see the emergence of the more modern card transaction processing capabilities such as memorising card details and allowing payments via digital wallets.
In the next few months we will see the “Pay by Zapp” button appear on more and more retail sites. Why not make saving as easy as buying your groceries and introduce an “Invest by Zapp” button? Taking the technologies developed for the retail market can give companies a cost effective way to make impulse saving as easy as impulse buying.