Mobile money - has its moment come?
- 16 February 2012
- From the section Technology
Take two scenarios where mobile technology should be able to make our lives easier. A migrant worker in Kenya wants to send your family some money without having to get on a bus and travel for days. A group of young professionals in London goes out for a meal with friends, and when one person pays, the others need to settle up with him.
In the first case, the money transfer system M-Pesa has been allowing people to transfer cash across the country for years now, proving hugely popular. In the second, it only becomes possible today for anyone with a smartphone to send cash to their friends and see it transferred instantly.
The Barclays Pingit system uses a smartphone app to permit person-to-person cash transfers of up to £300. Users who have an account with Barclays - and from March anyone with a UK bank account - can download the app, link it to their phone number, and then send cash to anybody who has linked their mobile number to their account.
This looks like a big step forwards in the long delayed mobile money revolution. When it comes to turning the phone into a wallet, this country - and much of Europe - is in the slow lane compared to some countries in the developing world.
In Kenya, the M-Pesa mobile money transfer system was launched in 2007 and is now woven into the fabric of everyday life. In Africa, where just about everyone has a mobile phone but only a minority have a bank account, banking on the move seemed the obvious answer to all sorts of problems.
In Europe I've seen countless mobile banking ideas over the last decade - from the soft drinks machine in Helsinki where you paid by SMS, to the phone which doubled as a travelcard for London's transport system, and innumerable schemes involving Near Field Communication (NFC) technology. But swiping your phone to pay for a coffee or a sandwich is still a minority sport, and few people yet see their handset as a mobile wallet.
But the launch of Pingit could be the moment everything changes. The scheme has two features which make it stand out from previous initiatives and could appeal to a mass audience. For a start, you can see a real need being met - who hasn't been part of that scrabbling around for cash when you sort out a restaurant bill or try to pay a window cleaner?
And then there is the fact that the technology - an app - is one with which anyone who has got a smartphone is now familiar. You don't need to go out and buy a new NFC handset, and then hope all your friends get one too.
And at the heart of it is a powerful idea - that your mobile phone number can become the key to your bank account without you having to hand over your banking details to anyone who wants to pay you.
The Payments Council - the trade body which looks after the nuts and bolts of UK payments systems - is working on a database of UK mobile numbers linked to bank accounts. There will, of course, be plenty of security concerns, and consumers will have to opt in to the database.
Having tried and failed this morning to register to receive payments under Pingit, I'm not entirely sure what will be the biggest hurdles to its adoption - worries about how secure it is, or frustration at the number of hoops you have to jump through to get going.
But the other banks are watching closely. When I spoke to a couple of Barclays' rivals last night, they were keen to stress that they were not going to be left behind in the mobile money revolution. We can expect more apps, more innovation - and a certain amount of hype about the mobile phone becoming the centre of your financial life. But this time it might really be true.