March 10, 2014
Less than 3 per cent of people in the UK have ever made a mobile payment in a shop. That compares with 7 per cent of people in the US, 5 per cent in Spain and France and 3 per cent in Germany, according to Bain & Company, in the survey of 25,000 people across the five countries. However, a new service is all set to enable users of Britain's nine biggest banks to send money to each other via their mobile phones.
The technology pronounced 'Pay-em' could be used to share a restaurant bill between friends, to collect money from sponsors of a charity event or to pay the childcare. This is basically the first payment service with the potential to link pretty much every UK current account to a phone number. The service is expected to be launched in April or May.Paym is currently in the final stages of testing by the Industry Body, Payments Council. The service has been in the planning since 2011, will be available to customers of Barclays, Bank of Scotland, Cumberland Building Society, Halifax, Danske Bank, HSBC, Lloyds Bank, Santander and TSB Bank. Mobile payments have in general been held back by security and privacy concerns as well as the lack of a cognitive universal payments systems via smartphone. The new service hopes to change that. Around 25% to 30% of the surveyed users said they would be prepared to try mobile payments. This figure ranged from 27 per cent in France and Spain to 16 per cent in the US. The three main reasons cited by users for the non adoption of smartphone based payments was security, privacy and their belief that it would not be more convenient than they way they pay now. The most widely used mobile payment applications range from retailer-specific systems such as the Starbucks app to broader services such as Google Wallet and Paypal’s mobile offering.
The case for mobile payments has been a long time in the making and it always feels like the sun is about to break through the clouds. In every country we surveyed the number of people starting to use mobile payments has doubled every year. We think we are a year or two away from the inflection point, said Stephen Bertrand, head of Bain & Company’s technology practice in Europe. It is now getting to the stage of a real threat coming to the banks if they do nothing, he added.
First Direct, Clydesdale Bank and Yorkshire Bank will launch Paym later in 2014. In the meantime Nationwide, Ulster Bank and Metro Bank will launch the service in 2015. Royal Bank of Scotland has signed up to the service but will not launch until later this year as it is prioritising other system changes. RBS recently suffered a series of IT glitches. This includes a setback in December that rendered users without access to their cash on Cyber Monday – the busiest shopping day of the year.