Mobile money - has its moment come?


Rory Cellan-Jones is given a demo of the Pingit service

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.

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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.

Rory Cellan-Jones Article written by Rory Cellan-Jones Rory Cellan-Jones Technology correspondent

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  • rate this

    Comment number 14.

    looks good on paper but sounds a ideal way for criminals to steal
    so will stick to my Non Smart Phone which cant run any apps nor do I have the desire to change my phone.

    see this with regards Google Wallet { mobile app } which is a virtual wallet

    Google closed that loophole quick but it must give concern.

  • rate this

    Comment number 13.

    Wow, you text the kids their card & present in one go !

  • rate this

    Comment number 12.

    Yes PayPal do charge but the charges are fair. In our coffee shop, you can pay by scanning a qr code, we've been doing this for a few months now, much better for us than paying out a minimum monthly charge for a chip and pin machine and very user friendly and convenient for our customers. The technology is there but British businesses can only blame themselves for failing to embrace it.

  • rate this

    Comment number 11.

    this is great news, but canadians have been doing email money transfers for 10 years, which are almost as simple and don't require you to know anything other than a person's email address. anyone with internet banking can do it, without a special app or a smartphone.
    i am looking forward to the day when i won't need to give out all my bank details just to make a one-off money transfer in the uk.

  • rate this

    Comment number 10.

    I've been using the Paypal mobile app for a while & it is handy but their fee's do add up. If this is going to be free, i'll certainly be kissing goodbye to Paypal.

  • rate this

    Comment number 9.

    The western world is much better placed to take advantage of all the 'mod-cons' and this should be huge if done properly (I've worked for Barclays IT before and I reckon they'll nail this!) - but spare a thought for those of us in developing nations who've been trying to do this for years with challenges you can't even dream of. How lucky you are - although I'll take my weather any day! ;) @Spigzy

  • rate this

    Comment number 8.

    Yes, everywhere else in the world has embraced this technology...but they don't live on "Treasure Island", do they?

    "I don't have the cash on me...I'll just buy these mints with my phone..."
    *tap* *tap* *tap*
    "For this payment of £0.55 there will be a £10 charge. Continue?"

  • rate this

    Comment number 7.

    #3 - Perhaps Im only used to posh dining but I dont remember the last time I went to a restaurant with bar codes on the menu :)

  • rate this

    Comment number 6.

    I'm with Chrisl on this, what's the point in instant transfers if it takes 3-4 days to do anything else. Credit card companies need to delay payments o they can charge their customers more. The country/system has had the technology for instant payments for years, it's just like anything else, we get new technology trickled down to us.

  • rate this

    Comment number 5.

    @James Paypal charge you to receive money, this appears to be free, which is a big step in moving things forward. I'm not a Barclays customer but will be trying it out when it's opened up for all.

  • rate this

    Comment number 4.

    In a way this is no different to using your mobile to do electronic funds transfer between bank accounts. It substitutes account numbers for phone numbers. It is slightly amusing that the banks who said instant transfers were problematic having been forced to introduce them they have now woken up to the business opportunity they create. Another nail in the coffin of mobile operators plans.

  • rate this

    Comment number 3.

    Paying in a restaurant: it would be a lot smarter if the app simply worked out what everyone owes (maybe by scanning barcodes off the menu?) and everyone simply paid the restaurant their own share, instead of having to faff around paying one person back.

  • rate this

    Comment number 2.

    I find it frustrating that you can do this instantly by mobile, but when paying a credit card bill online it takes 3 to 4 days to go through.

  • rate this

    Comment number 1.

    I can already do this with the PayPal app on my phone, which most people have - but not sure which I trust more/less - Barclays or PayPal !


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