Mobile money - ready for lift-off?
Is tomorrow the day that the idea of using your mobile phone to pay for things finally takes off? The Paym system which links your mobile phone number to your bank account goes live on Tuesday - and may have a better chance than others of finally gaining widespread acceptance for mobile payments.
However, having seen plenty of other mobile money ventures flounder, I'm reserving judgement. Only last week, I got a cheque (and what am I supposed to do with that?) in the post for £9, the remaining balance in my O2 wallet. I'd forgotten I even had money in this app and so it seems had most of the other users because the wallet scheme has been closed due to what Telefonica - O2's owners - described as "a number of developments in the financial services sector".
Then at the weekend, while thinking about which other payment services were on my phone, I found I could use the PayPal app very simply to send small amounts of cash to friends. This seemed ideal - until a relative pointed out that to get the £5 I'd sent her as a test she'd have to log into PayPal and, while she had an account, she'd never used it and couldn't remember the password.
I had better luck with the £5 I sent to a friend who's a mobile money expert - until he returned the £5 as a Barclays Pingit payment. Now I had used this service when writing about it a year ago - indeed a statement arrived a few days ago telling me I had £30 in my Pingit account. But I had long since wiped the app off my phone, and I spent half an hour on the line to a Barclays call-centre to find I would have to go through a lengthy verification process to reawaken Pingit and get hold of my cash.
The problem for mobile money schemes is the need to balance security with ease of use. So far, the sheer aggravation of having to download apps, set up memorable phrases and remember passwords has made the schemes of doubtful value to many. That in turn has meant there is no network effect, where I use a payment app because all of my friends use it and lots of businesses accept it. Some schemes - like the Starbucks mobile payment app or the Hailo taxi app - have achieved lift-off, but there is no universal system enabling the mobile user to pay anyone with a click.
Now, the Paym scheme has some key characteristics that could make a difference. It is based on a simple idea - link your mobile phone number to your bank account. It is also a cross-industry venture, with all of the major banks eventually joining in, though a couple of big ones aren't ready in time for the launch.
To make payments, you register your mobile number with Paym, install a mobile banking app and simply choose a name from your address book, and send cash to their number. Receiving payments is even simpler - you don't need an app, you just have to register your number, then anyone else can send you money.
But there is still no guarantee that Paym will take off. The question most people will ask is just what problem this is solving. Like Pingit, it seems to be aimed at people who want to send small amounts of cash to their student children or those who pop out for a pizza together and then need to divide the bill up. It might also be useful to pay the window cleaner or the builder - but that depends on both registering for Paym and being willing to accept it. What's more there is a limit of £250 per transaction, and that won't be enough to pay most builders.
There are no plans to get bigger businesses - restaurant chains, coffee shops, bus and train companies - to accept it. So Paym may be an important step on the road to the cashless society - but most of us won't feel able to leave home without a real wallet as opposed to a mobile one just yet.