Textual dealing: the oncoming revolution in mobile payments
Last week, the Payments Council announcement that the UK banking sector is building an industry-wide mobile payments service, which will enable customers to transfer money as easily as sending a text. But will this service benefit businesses as well as individuals? And how much progress have banks made in delivering mobile banking services to their corporate clients?
The service announced by the Payments Council is due to be launched in spring 2014 and is being backed by eight banks: Barclays, Cumberland Building Society, Danske Bank, HSBC, Lloyds Banking Group, Metro Bank, RBS and Santander. The scheme will use the UK Faster Payments service and will enable individuals to make domestic payments using their mobile number – without the need for supplying an account number or sort code.
The scheme will be linked to users’ underlying bank accounts, unlike mobile money schemes such as M-Pesa, which was launched in Kenya in 2007. Customers will be invited to register for the service by their banks and will make payments via an app on their smartphones.
“The scheme could be used just as easily by businesses as by personal customers, although this is more likely to be of interest to small businesses rather than major corporations,” says Jonathan Bye, senior consultant at RBS, who is also on the Mobile Payments Programme Board. “At least initially, this will be intended for payments of no more than a few hundred pounds – although that is yet to be decided.”
Mobile services for corporates
The new scheme will represent a substantial step forward for mobile payments – but in the meantime, banks have been pursuing a number of initiatives which bring different mobile capabilities to corporate clients.
Where collections are concerned, the Pingit for Corporates service launched by Barclays in May 2012 enables companies to receive payments via a mobile device – regardless of whether the payer is a Barclays customer.
“There are currently over 50 corporate clients signed up to Barclays Pingit for Corporates service, and we are seeing a huge amount of interest from others,” says Eimear O’Connor, senior product manager, corporate mobile payments, global cash management at Barclays. “There’s a real demand to understand more. We’ve seen particular demand from local authorities, transport companies, universities and membership associations, although there’s a huge spread across the customer base.”
Customers using the service to pay for goods do so via the Pingit app, which can be used to scan a QR (quick response) code or corporate ID code, supplied by the beneficiary. Since its launch, the app has been downloaded more than 1.3 million times, with more than a million payments.
Meanwhile, some banks offer mobile payment solutions to their corporate customers. Since its launch in November 2011, HSBCnet Mobile is used by almost 8,000 treasurers and has been used for payments totalling $10 billion.
Security is the greatest concern for companies using this type of technology. The platform is accessed via the internet rather than using an app, and authentication is completed using a separate handheld device – although there are plans to replace this with soft token authentication.
The arrival of mobile payments has a great deal to offer companies in terms of convenience. Treasury professionals are able to authorise payments while they are travelling overseas, or simply away from their desk. But not all treasurers are comfortable with the idea of working with potentially high-value payments anywhere and everywhere – particularly when the mobile device in question may be used for personal as well as professional activities. Should companies be concerned, for example, about the prospect of treasury staff making large payments while sitting in a bar?
“These devices are hugely empowering for the corporate world – but there is a lot of responsibility for the people using the technology,” says Marcus Treacher, global head of e-commerce for payments and cash management at HSBC. “The approach that we use for clients is to insist on a maker/checker model, in which one person enters the transaction and a second independently authorizes it. This gives a robust check against anyone doing anything silly.”
Treacher points out that another obstacle involved in developing mobile banking technology is keeping up with the variety of devices used by corporate customers. “Companies are challenged to keep up with the extreme pace of smartphone innovation,” he says. “You can get the situation where treasurers would love to use the latest devices, but corporations can be a few steps behind in terms of what they are comfortable with allowing staff to use.
“This is compounded by the fact that countries are maturing at different rates. If you are covering customers globally, you need to factor in that customers in some areas of the world may not have smartphones, whereas customers in other areas will be pretty much enabled.”
As a result, banks looking to develop services for global customers might have to support everything from the latest smartphones to significantly older devices, which adds to the complexity of building the software.
Mobile technology is continuing to develop at a very fast rate and is largely driven by consumer demand. “In the past, something like a fax was initially just a corporate device,” says Bye. “The same was true of PCs and indeed mobile phones. Eventually these devices found their way into the consumer world. But this pattern has changed – the consumer world is now driving developments in the corporate world when it comes to mobile devices.”
Mobile banking is attracting substantial attention from corporate treasurers, but this type of technology is still in its infancy. In the future, devices could support biometric authentication such as facial recognition – or could use GPS to prevent individuals from approving payments in specific locations, such as in a pub or cinema. Meanwhile, the larger screen size offered by tablets and the new breed of larger smartphones is opening up the possibilities in terms of the functionalities that mobile services can provide.
However, security fears could temper the enthusiasm for these innovations.