A company owned by Britain's major banks is seeking tens of millions of pounds in funding to launch a mobile payments service that it believes will deliver huge benefits to struggling small business-owners.
I understand that Vocalink, in which the main high street lenders are shareholders, is drawing up plans to establish a new company into which capital would be injected by a group of external and existing bank investors.
The new service, which is being developed using the project name Zap (Berlin: UW4.BE - news) , would allow companies to present bills to consumers on their mobile phones, and for immediate payment to be made if customers have sufficient funds in their accounts.
It would avoid the costly production of paper bills for utilities and other mass-service providers, while for small and medium-sized companies (SMEs) it would mean faster payments being made to them at a time when cashflow constraints are frequently damaging their prospects.
Insiders said the project represented a landmark in efforts to make instant mobile payments a mass-market proposition in Britain.
Vocalink’s chief executive David Yates is in talks to raise seed funding from the big banks. A major investment bank is expected to be hired in the near future to co-ordinate the fundraising, according to sources.
The new service will be launched using a new consumer brand-name which has yet to be created and could be up-and-running by 2014.
It is unclear how much of the bill for the new system would be footed by the banks, but insiders say that the ownership structure of the new company would be “more entrepreneurial”, with shares potentially sold to SMEs, utilities, retailers and “other participants in the payment value chain”.
It would be more far-reaching than another initiative currently being devised by Vocalink on behalf of the Payments Council, the body which supervises payment services across the UK.
The collaboration with the Payments Council would be a basic money-transfer service allowing customers of UK banks to transfer money between accounts. It would use a new national mobile database, on which every bank account would be linked to mobile phone numbers.
Barclays (LSE: BARC.L - news) is among the banks to have signalled its participation in the project, despite earlier misgivings among some of its executives that it was duplicating Pingit, the mobile money transfer service launched earlier this year.
Vocalink’s board includes a range of heavyweight businessmen, including Sir John Gieve, former deputy governor of the bank of England, and Richard Hooper, architect of the reform of Royal Mail.
The company says its systems are involved in processing every interbank payment in Britain, last year handling 9.6bn payments worth nearly £4.5 trillion.
Vocalink was unavailable for comment.