2014 – The Year of Paying by Text Message16th January 2013
Earlier this month I wrote about how 2013 would be the year that payments via mobile took off in the mainstream in the United Kingdom.
In relation to the rest of the developing and developed world, the UK is still lagging behind with regards to it’s technology for financial transactions using mobile platforms, and requires bringing up to standard quickly in order to aid the recovery of it’s flagging economy.
The Payments Council, the organisation of financial institutions that sets strategy for UK payment mechanisms, have now announced they will be aiding this process by signing up eight major banks to back the plan – Barclays, Cumberland Building Society, Danske Bank, HSBC, Lloyds Banking Group, Metro Bank, RBS and Santander.
Many of these banks already have smartphone apps that allow for the transfer of funds across the mobile platform, but the new system will allow account owners to opt-in to a database that will allow transactions to take place via text message simply by sharing their phone number, as opposed to sharing their bank account number and sort code as current apps require. Customers who do not wish to have their details in the database are able to refuse, as it is an opt-in service only.
The two companies administering the scheme are highly experienced in handling financial transactions involving new technology. Faster Payments handled more than 800 million online and phone banking transactions last year, whilst the Link network processed 3.1 billion ATM withdrawals.
There will however be strict limits put in place on how much money can be transferred using the service in order to ensure a balance between convenience and security – with the exact amount yet to be decided.
Following a study using 5000 consumers, the Payments Council also concluded that security measures would at least have to involve some sort of passcode system, with the banks also having the ability to disable any accounts suspected of being misused. It will spend the next 12 months perfecting the exact guidelines and minimum standards for security of the system.
So whilst it may not be 2013 that this technology is introduced, it can still be the year where mobile transactions are accepted into the mainstream through use of regular smartphone banking apps. By Spring 2014, when the Payments Council intends to launch the text message service, mobile transactions could be so widely accepted and used that the new text service takes it to a new level of technological and cultural progression – bringing all round benefits to the economy and more convenience to daily life.