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The United Kingdom has taken the next step towards the end of using cash, or so it seems. With the introduction of the new service Paym, transferring money is made as easy as sending a text message. Nine banks launched their support for Paym last week, which means that 30 million people can transfer money to their friends. By the end of 2014, 40 million people can pay each other from their mobile phone.
‘Paym is the next step in the move from cash to a cashless society,’ according to this blog post by Alan Meban. It makes transferring money between people very easy. Paym is intended for payments between individuals and relies on registering a mobile phone number against a bank account and. Users enter their friend’s mobile number into their bank’s app or select it from the contact list, they then specify the amount and press send. At the moment the services focuses on payments between individuals, but in future it can be extended to paying in general.
Nine banks so far
Nine banks and building societies have adopted the service so far: Bank of Scotland, Barclays, Cumberland Building Society, Danske Bank, Halifax, HSBC, Lloyds Bank, Santander and TSB. Other financial institutions have committed to join Paym later in 2014, including Clydesdale Bank, First Direct, NatWest, The Royal Bank of Scotland, Ulster Bank and Yorkshire Bank. The government supports the initiative, which has been described as ‘the first industry-wide collaboration in the UK, which could potentially link up every bank account with a mobile number’, predicted the Daily Mail in this article. The banks expect some 1 billion payments to be made using Paym by 2018.
The move towards mobile payments is a logical step. ‘Just last month the British Bankers’ Association revealed that transactions using mobile banking doubled in the previous 12-month period, reaching 18.6 million transactions in a year, with downloads of mobile banking applications reaching 12.4 million’, according to this article on Contact Centres. Cash and cheques are expensive to transport, handle, count and process. More then 94 per cent of adults own a mobile phone at the moment. Research by Consumer Intelligence found that 25 per cent of customers said they would use the scheme, with the figure rising to 39 per cent among those aged between18 to 34 years (according to the Telegraph).
Concerns about security
The research of Consumer Intelligence also showed that 47 per cent of the 2,000 participants would not use Paym as they were concerned about security and money gone missing. The survey shows that a big group of potential users is reluctant to adopt the new form of electronic payments. Out of those 47 per cent, 71 per cent of respondents have concerns about security, 42 per cent prefer traditional payment methods, 39 per cent worry about what would happen if their mobile phone were to be stolen, 32 per cent are concerned about paying the wrong person and 27 per cent doesn’t have a smartphone.
Security is a big topic to ensure the success of Paym. The service uses an existing mobile banking or payment app, which is already secure. Paym itself states that ‘the service has been developed by participating UK banks and building societies to meet with their high security levels’. All the bank account information is held securely within the mobile banking app, fully protected by data protection laws. The only information stored is the phone number of users to send and receive the payment (more details on Trusted Reviews).
It is clear that the payments landscape is changing rapidly with the introduction of new technologies and services. On the one side banks encourage card use, as cash is expensive; on the other side users want a seamless payment process without any fuss. When security issues are handled accordingly, we’re one step closer towards a cashless society.
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