UK startup CloudZync is launching a new contactless payment app for smartphones, called Zync Wallet. The app, in addition to its virtual-wallet function, will log customers’ spending in shops, allowing them to take advantage of merchants’ loyalty promotions. Around 280 independent merchants, mainly based in London, have signed up for the service so far. The company currently has 15 employees but says it will expand if the plan takes off, potentially into overseas markets. Shops can subscribe to the CloudZync Business Services tools for £40–160 (US $47–186) per month, with all transactions made by the app free, or else be charged £0.01–0.05 (US $0.01–0.05) per transaction. The Zync Wallet app can be downloaded from the Apple Store, and a version for Android will follow later this year.

Tarifica’s Take

We think this is a great idea, even if we can’t be sure whether a tiny startup can really go head-to-head with major players like Apple and Paypal. In fact, we think that the virtual-wallet idea is so good that MNOs should strongly consider getting involved, as well. M-commerce is on the rise—a recent German survey of 1,000 smartphone users found that almost a third have used their devices for shopping, and that half of them are in the prized 25–34-year-old demographic. And contactless payment, in which a smartphone substitutes for cash or cards, is an increasingly popular variety of m-commerce.

CloudZync’s strategy, which its founders hope will help them compete with the international giants, is to work closely with local merchants and tailor the service to their needs, thereby helping them to build and maintain customer loyalty. We have been advising mobile operators to pursue a similar approach in developing their own apps (or partnering with other entities to develop them): concentrate on providing locally-oriented, value-added services specifically targeted to their subscribers. A company such as CloudZync would seem to be an ideal partner in this regard. The operator could bring a large quantity of customers to the app developer, while the virtual-wallet app, by placing a desirable service in the customers’ hands and giving access to privileged discounts, would enhance loyalty to the operator. Eventually, the venture could well be a significant revenue generator for both parties.