Still a way to go for mobile payments? Asks Emma Wright - partner specialising in telecommunications and technology at Bond Dickinson in London
It is clear that the advent of mobile payment technology has seen a meteoric rise. For example, the Centre for Economic and Business Research has reported that the value of goods and services purchased using a mobile phone is expected to almost triple from £4.8bn in 2013 to £14.2bn in 2018, and CEBR believes that more than 20m adults will be using mobile payments by the end of the decade.
The rise of mobile payments
The Barclays' Pingit app was originally one of the first to the party when it launched in 2012. Since then an increasing number of companies have entered the market offering consumers innovative access to transaction facilities such as banking apps and contactless payments using Near Field Communication (NFC) technology. Other banks have followed suite with many supporting 'Paym' (backed by the Payments Council) which allows individuals to exchange up to £250 a day using each other's mobile numbers alone although not all have yet joined. Mobile operators now offer consumers yet more choice with EE allowing contactless payments via smartphones for purchases under £20 – though money needs to be "pre-loaded" onto a digital wallet and account details stored on a secure part of the phone's SIM card. However, handset giant Apple notably not including NFC technology in its iPhones to date arguably took momentum away from the NFC take-up.
Kenya's M-Pesa has been held up as a shining example of the future however the lack of banking infrastructure and lack of alternatives in Kenya seem like two good reasons why M-Pesa has achieved the success that the current multitude of options offered in the UK are trying to emulate. Equally at a time when the average UK consumer has several cards ranging from credit and debit to loyalty and travel cards in their physical wallet and various reservations or tickets by email it is at least arguable that a mobile wallet should appeal.
However mobile payments have also been met by an element of scepticism from UK consumers further contributing to no single method emerging as the market leader at present. Even to the technology savvy consumer, the range of payment methods offered by mobile operators arguably adds to confusion coupled with ever increasing concerns around fraud or simply mistaken payments when a customer has more than one NFC enabled payment means, This consumer also has more practical concerns if the phone is stolen or simply runs out of battery. Such concerns would be presumably heightened if the loss of a phone would lead to the loss of all methods of payment, reservations and travel in the case of a virtual wallet scenario?
Retailers are also being asked to bear initial investment costs to update their systems so they can offer consumers mobile payment options. Weve, the joint venture between EE, Vodafone and O2 focuses on developing a mobile payment platform and targeted advertising for retailers increasing the transactions, loyalty and data analytics for the retailer although to date it is unclear whether it has accelerated the development of mobile wallets which was one of its original aims.
At the time of writing there are rumours in the press that the iPhone 6 will have a mobile payment facility essentially turning it into a credit card and that Apple will enter into a direct partnership between Apple and a card company (thereby also eliminating third party processing fees). The Apple fingerprint technology may also help allay security concerns that have beset other solutions to date.
The future?
Whilst it is clear that the mobile payment technology is coming on in leaps and bounds, it seems that the hurdle remains of how to convince the everyday consumer to ditch credit and debit cards which are universally accepted and choose one of the many mobile options.
E: Emma.wright@bonddickinson.com
