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Mobile Payment Systems : Consumers looking for standardised solution

Depositphotos_5884830_originalYou may not realise it, but people have been able to use their smartphones to make payments for years now. If you’ve done it already, you’re one of the few. While 83% of financial executives predict widespread adoption of mobile payments by 2015, it has been slow to come.

One of the main issues preventing people from using the services is currently there is no set standard. Competing services use different formats and have different client bases. What works in one store won’t work in another. Consumers just find it’s too much of a hassle to use it at all.

To make it easier, the UK Payments Council has defined a method enabling users to pay via their smartphone using nothing other than their mobile number. The initial setup links a bank account to a mobile number which is then stored in a database so the banks can exchange the money without the need for the consumer to enter banking information. So far ninety percent of UK accounts will be included in the service launching in 2014 based on agreements with financial institutions.  This service will make it extremely easy to pay individuals, but it is still unclear how well it will apply to high streets.

In order to reach those retail sales, Paypal is launching Beacon in 2014. The company is looking to dominate the mobile retail market the way they did with online payments. They’ve set their sights on becoming the standard way to pay. Beacon is designed to work without GPS or mobile signal, and the user doesn’t need to open up an app either. The retailer installs the Beacon device into their store and when a user walks in, the Beacon and their mobile communicate. If they chose, a user clicks a notification to check in at the store and all payments are processed automatically via Beacon. If the user doesn’t check in then they can use traditional forms of payment.  This is undeniably easier than searching a wallet for cash or card, or even using a smartphone to open an app to pay. But the system still needs to win over consumers and ease concerns about security.

Are these payment systems safe?

Naturally consumers are concerned with the safety of their account information. PayPal and the Payments Council are addressing these concerns aggressively. So are all the competitors launching new payment systems in the US and the UK. Proponents say mobile payment systems are, or can be, secure and the real challenge is convincing consumers that this is true.

It took time for people to become comfortable with online payments. However, in 2013 total global online ecommerce sales topped an estimated $1.2 trillion. The increasing comfort with online sales could indicate that once there’s a viable, easy to use system in place, mobile payments may take off just like the mobile market itself.

What do you think? Are you ready to use your smartphone to pay, or will you stick with your Chip and Pin for now?

Oliver Burt

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