ICT Views

Mobile Banking: From one extreme to another

by: (Associate Director, Research and Development) on

Tired of cash?

Bored of Bank Transfers?

Then today might be an exciting day for you.

Why? A new payments system launches today in the UK - which allows bank customers to send money using a mobile phone number.

It’s called Paym (pronounced "Pay–Em"). Its app based and will allow users to transfer money without needing a sort code or account number. To make a payment, customers can either select a contact from their phone or key in a mobile number. The app will then ask you to confirm the name of the recipient and the amount before the money is sent.

Users will be able to send up to £250 a day, although some banks may decide to offer a higher limit.

Growth Area

Paym is the most recent, but certainly not the only app of its type. As reported in the Telegraph recently:

The growth in mobile payments technology is revolutionising how people manage their money. The number of payments made through banking applications on mobile phones has doubled in the past year, according to research from the British Bankers’ Association.
Barclays’ Pingit app, which launched just before the 2012 Olympic Games, also allows people to make payments using mobile phone numbers. The app has gathered 2.5 million regular users in 18 months.

Risk vs Reward

These figures sound impressive, but do people really use them on a large scale? It seems there are some doubts. Not every provider is embracing the Paym system from the off. Nationwide current account holders will not be able to make payments until next year, and other banks, including Metro Bank, Clydesdale and Yorkshire Bank have not set a timetable for joining the scheme.

And what about customers?

Market research indicates that, as ever, customers are worried about security. There’s a nice quote used in the article hyperlinked above: “fraud is like a balloon – if you squeeze it in one place, it bulges somewhere else”.

This tends to be the case. Increased focus or controls in one area provide an opportunity for the intelligent criminal to exploit somewhere else. But you could also argue that a new channel or product also provides a new opportunity for those with less than honest intentions. It’s something ICA recently recognised in their new Specialist Certificate in Money Laundering Risk in New Payment Products and Services (NPPS).

The Alternatives

vanFor the time being, more traditional banking options still exist. They may have their own weaknesses, but they’re also tried and tested.

And to be fair, every option was new at some point. (Image source: BBC news)

But if you really aren’t game, and you live in an area where it’s available, you can go for the old-school version of mobile banking.

There’s no app, no phone and no signal required.

But you will need to give them your address for when the van arrives…

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