Go As You Pay

Public trust in the UK banking sector is at an all-time low, so it’s no wonder that people are wary of mobile payments and the fast approaching ‘cashless society’, which would see a move away from tangible currency towards mobile payment apps and devices. According to a majority of tech experts, it is estimated that this transition will have taken full effect by 2020. So how is it that, according to a survey conducted by Vista Retail, only 5 per cent of consumers are currently taking advantage of contactless payment?

Earlier this year, Channel 4 revealed that card readers built into mobile phones can be adapted to access data from Barclays contactless bank cards. More recently, it has been revealed that the Royal Bank of Scotland (RBS) debacle, which left over 10m NatWest and Ulster Bank account-holders unable to send or receive payments, was caused by a poorly-executed system update. So it perhaps stands to reason that, in the current climate, consumers would be reluctant to adopt an unfamiliar and largely-untried technology. So what are the main hurdles to overcome before we see widespread adoption of mobile payments?

Security fears
There are concerns that using mobile payments could leave consumers more exposed to fraud and the theft of financial information. By integrating with the existing Chip & PIN solution, however, mobile payment apps actually add extra layers of security and encryption to each transaction. For example, the contactless nature of mobile payments removes the chance of your details being stolen through skimming (obtaining a customer’s card details by illegally scanning the magnetic strip) because your physical card is not used in the transaction. 

In addition, ATM machines are now beginning to be equipped with mobile payment options. This is bad news for card-cloners as it removes the need for consumers to physically insert  their card into the machine and enter their PIN on the keypad.

Fear of change
Fear of the unknown is only natural. It is important, however, to remember that mobile payment technology is a relatively new venture for banks and organisations in the UK, so as with any new technology play, there are bound to be misconceptions and unwarranted concerns. Take Chip & PIN for example. There was an initial suspicion that this, more secure and convenient form of payment, was actually a way for the banks to absolve themselves of any liability for instances of card fraud. Yet Chip & PIN systems are now commonplace in the UK retail industry and, according to the UK Cards Association, accounted for over £87bn worth of transactions in the first quarter of 2012.

Mobile payments are a faster and more convenient option. Removing the need to slide your card into a reader or count out cash cuts down on transaction time and streamlines the whole process. The majority of mobile payment apps also provide a money transfer function, enabling consumers to easily exchange money with other individuals from any location. Furthermore, consumers utilising mobile payments will benefit from targeted deals and offers.

It can’t do everything a credit card can
With a variety of mobile payment options being offered by banks and other organisations, it is understandable that consumers may feel that they are limiting themselves by committing to just one. Contrary to this, there are mobile payment options now on the market that turn a smartphone into a ‘virtual wallet’. This ‘virtual wallet’ allows the user to load all credit, debit, store and gift cards onto a smartphone app and use any of them for in-store, online and ATM transactions – providing a completely universal mobile payment solution.

Jason Carey is the founder of SwipePay