VocaLink’s introduction of its new mobile payment service, Zapp, is the latest sign that mobile payments are gaining serious momentum. With the anticipated launch of the UK Payments Council’s ubiquitous interbank mobile P2P payments service next year, we are seeing a major disruption to traditional banking.
To date, it is clear that banks have not been able to truly capitalise on the wider m-commerce opportunity available. The disparate nature of retailers, banking institutions and consumers themselves have placed many obstacles in the road and while many mobile payment and mobile banking apps exist, they have either been platform-specific and tricky to interoperate, or unable to fulfil banking and payments standards.
Mobile payments technologies themselves are in their infancy; their continued evolution is affecting tried and tested payment acceptance processes. Services like Square, iZettle and Paylaven are disrupting traditional merchant payment providers while at the same time, smartphones are becoming payment acceptance devices, thereby reducing the time to bring on board new merchants and also reducing cost of transaction.
As new wearable devices such as Google Glasses and the iWatch arrive on the scene, their ease of use will allow customers will complete even more digital transactions on the go. This all means that banks are increasingly focusing on m-commerce as a means of both providing better customer service and meeting demand as well as enhancing their top lines. M-commerce provides banks with unique opportunities to develop complete and holistic payment solutions in collaboration with retailers and telecom providers so as to provide customers with seamless, safe and secure ways of paying for the goods and services they buy on their mobile devices.
However, with an increase in mobile payments also comes risk. Whether anti-money laundering (AML), fraud, device theft or shoulder surfing, this is no different to any other new technology. In the case of mobile payments, these risks converge with those of the financial services and telecommunications industries. For example, big data analytics helps such organisations comply with industry regulations and better manage risk. As a result, the regulators, telecom operators and hardware vendors will all need to work closely together to parry the threats of fraud and have the technology and processes in place to achieve this.
Only once these problems have been overcome will the market flourish. Above all, ensuring a good customer experience should be the ultimate goal for all parties involved – mobile payments need to be easy and risk free. With constant movements in the industry and new players entering the game, the wind of change is rife and it is progressively being driven by consumer demand as they seek new channels for payments (and communication). Banks must embrace this disruption at pace to retain their relevance and move with the times.
