Jan. 17, 2012
An industry-wide mobile payments service set to launch next year in the U.K. will enable users to send mobile payments using just their phone numbers and a password. Eight of the nation’s major banks, including Barclays, HSBC and RBS, have signed on to the program, which is being guided by the U.K. Payments Council and will rely on a customer database built by VocaLink.
First announced in early 2012, the program is expected to launch in spring 2014. Prior to that time, banks will enable their customers to register for the service by linking their phone numbers to their bank accounts via the Web. Once enrolled, customers can use their phone numbers and a passcode to make person-to-person or person-to-business mobile payments, without needing to provide an account number or any other information.
Todd Ablowitz, president of mobile payments consultancy Double Diamond Group, says the service is likely to be a hit—provided any cost to consumers is appropriate to the value provided. “It’s important to note that these types of services [aren’t as highly valued] in developed markets, where the banking system is highly penetrated because it becomes only a way for casual transactions rather than consumer-to-business transactions, which are handled very well by payment cards,” he tells Paybefore.
A similar system could be developed in the U.S., but the sheer range of the American banking sector could present a hurdle, Ablowitz adds. “The U.S. banking system is quite fragmented, with well over 8,000 financial institutions, which causes a large barrier to getting a product like this off the ground,” he says.