Zapp, a new mobile phone payment service that promises to challenge established card services on price and convenience, will launch next year with big-name grocers and high street retailers including Asda and Sainsbury’s.

The service is designed to be used on the high street and for online purchases. It promises to compete with Visa and Mastercard on price and speed, while offering a simple interface which could cut abandoned online shopping transactions by 40%.

The service would be competitive with debit card fees, which typically were as low as 0.2% of the transaction, said Zapp CEO Peter Keenan. Another key part of Zapp’s appeal to retailers was its convenience for making online payments, he added.

“We’ve engineered the customer experience to be better than a card payment, even a card-on-file payment. We’ve cut the number of steps needed to make a purchase by 50%,” said Keenan.

Small and medium-sized businesses were likely to benefit from faster payments. “Smaller merchants will have the ability to get paid quicker, on the same day in some cases. For businesses where cashflow and liquidity are so important it can make a difference,” said Keenan.

The ubiquity of smartphones meant the time was now ripe for mobile payments to enter the mainstream. “More and more things that impact our daily lives are converging [in services] on the smartphone. That will be the real driver of adoption,” he said.

According to the CEBR, 20 million adults will pay by mobile by 2020, with the value of purchases tripling from current levels to £14.2bn in 2018.

Pilots of the service will begin this year, with a full launch scheduled for the first half of 2015. The service will also ­ultimately be capable of handling vouchers and loyalty point schemes.