Mobile payments, biometrics and crypto currencies. These were just some of the emerging trends discussed at the recent Westminster eForum Keynote Seminar at London’s Royal Society. Tech Digest’s Chris Price reports
The way we spend our money is changing rapidly. Only a few years ago cash was king and cheques were regularly written out to make payments in store as well as to clubs, schools and to friends. But with the advent of digital technology, traditional methods of payment are starting to disappear. Even payment via credit and debit card using CHIP and PIN is now beginning to look dated as we’re increasingly using our mobile phones to make and receive payments using services like Apple Pay as well as contactless technology for offline transactions (ie. paying for a bus or tube journey).
As this is happening, the big high street banks which once held the monopoly on our funds are losing some of their power. Instead we’re seeing the emergence of new challenger banks like the digital-only Atom Bank, which recently received a £45 million investment from BBVA taking its total funding to £135 million despite the fact that it’s not due to launch until early 2016.
At the same time we’re witnessing the continued rise of online payment services such as Paypal. Indeed according to Stella Bokun, Manager, Telecoms Software, Analysys Mason, in ‘Spain and Germany the use of Paypal has already overtaken credit and debit cards for online payment’. But is cash really going to die any time soon?
Not according to Seamus Smith, CEO of online payment system Sagepay. “We will be cardless before we are cashless,” he told audiences at the Westminster eForum Keynote Seminar at London’s Royal Society. Although alternative systems to cash, such as Bitcoin and the Blockchain technology which it uses, are gaining momentum they still remain very niche propositions.
Paying by phone with Pingit
Mobile phone payment services, on the other hand, are starting to grow quickly with five new services planning to launch next year according to Craig Tillotson, Chief Executive of Faster Payments – a UK banking initiative to reduce payment times between different banks’ customer accounts from three working days to just a few hours. Currently around £1 in every £4 is spent online and spending via mobile is growing at four times the rate of spending online via non-mobile (ie via desktop/laptop computer).
Services such as Pingit from Barclays, which uses the Faster Payments service, enable customers to make payments via any kind of mobile phone to all UK current account holders with needing account number/sort code details. What’s more, you don’t have to be a Barclays customer to use it any more. Barclays has also recently teamed up with Zapp so that Pingit can be used at point of sale terminals in shops and online where the Pay By Bank app symbol is shown. Says Faster Payment’s Tillotson. “We’ve seen growth of more than 15 per cent a year because of mobile banking.” With Paym, the standard used by Pingit, also agreed by most of the high street banks we are likely to see more of these services gain in popularity during 2016.
Nor will it just be the big established high street banks which will start to launch new types of digital payment services. So too will companies classified as ‘near banks’ such as Simple which claims to offer a mobile optimised banking experience and which has recently been acquired by Spain’s second biggest bank, BBVA.
There are also new types of ‘digital wallet’ services emerging which use social media for payments such as Venmo which is designed for sharing expenses between friends, including restaurant bills, taxi fares and even rental payment. All you need to do is sign in using Facebook and download the app (Android or Apple iOS) to your smart phone.
Of course these new methods of payment for goods and services aren’t going to be adopted over night. It’s taken seven years even for contactless payment cards to reach critical mass and it’s likely to be another few years before the mass market is comfortable with the idea of using their phones to make payments in store or on transport networks.
In part this is because the technology isn’t quite ready. According to Mike Tuckett, Head of Transformation Delivery, Transport for London, around a quarter of PAYG journeys on the tube are now made via a contactless debit or credit card with 8 million cards having been used for the transactions. However the same can’t be said for Apple Pay which remains a niche proposition. This is probably because using a mobile phone to touch in and touch out via Apple Pay is currently very difficult.
Firstly before you approach a ticket gate you need to double-click the Home button of your iPhone to bring up your default card in Apple Pay. Then you will need to authorise the transaction by placing your finger on Touch ID until you see ‘Hold near Reader to pay’ on the display. Using an Apple Watch the process is a little easier but you really need to wear the watch on your right arm as the card readers are usually on the right of the turnstile.
According to Jonathan Vaux, Executive Director, New Digital Payments and Strategy, Visa Europe, cards work every time whereas fingerprint readers currently aren’t always that reliable. However, he admits that for the younger generation ‘Touch ID is natural whereas a PIN is seen as quite intrusive.’ Older people though are often nervous about new technology, partly because of fears over whether it’s secure. “We need to make the customer feel safe,” adds Vaux.
However for Dave Birch, Director of Innovation, Consult Hyperion, biometric technology, including fingerprint recognition and even face recognition, could be particularly useful for older generations too. “Although we tend to think of the technology for millennials there is a fantastic opportunity for older people who can’t always remember their PIN number.” Deutsche Bank is even trialling a technology that claims to identify who you are from the way you hold a screen, how you touch it and heavily you press the virtual keyboard buttons. We’ve come a long way since the days of writing cheques and having to pay cash for virtually everything.
This day was made possible by Dell. Find out more about Dell’s virtual desktop solutions.