Mobile money: a solution to a problem that doesn’t exist


Mobile money: a solution to a problem that doesn’t exist

Mobile money is the future, or so I’m assured by research into the use of Near Field Communications (NFC) systems, which says most of us will be using our smartphones to pay for stuff within the next four years.

First things first, mobile money is not new. And, no, I’m not talking about the fact that money itself is pretty damn mobile when you think about it — what I’m talking about provides a system whereby you don’t have to carry real cash and can instead just point an easily carried payment device at a retailer.

Most of you will immediately know what I’m talking about when I mention the name of this bit of wonder kit, this device that has revolutionised retail, that does away with the need to carry cash and that just about everyone is comfortable using: it’s called a debit card.

For the small business it’s a no-brainer as the payment mechanisms are already well established and the associated costs already factored into the business plan. There are precious few compatibility problems, everyone knows how to use it and almost everyone has one. Sure, even with chip and pin there remains a fraud risk but, again, that’s a known entity and most businesses will be aware of the procedures required to mitigate the risk and deal with any fraud that should occur. And, my debit card does not need a battery, how about yours?

Debit cards

Which brings us neatly to the problems I have with this concept of the majority of us jumping from cash and cards to smartphone money and NFC systems. Debit cards have been around since the early eighties and, in 2011, banks still issue cheque books. OK, that is about to change over the next year or two as a result of fewer people actually using cheques any more, but it has taken more than 25 years to get to this point.

Debit cards have been around since the early eighties and, in 2011, banks still issue cheque books

If we are to believe the NFC hype then the general public acceptance jump from debit card to smartphone as payment method will take less than five years. That, frankly, is very hard to believe, even for an evangelistic and unashamed geek like me. (Of course, the fact that the research suggesting this was commissioned by Monetise, a “global enabler of mobile money services” does nothing to help me accept the conclusions.)

But let’s take a closer look anyway. I am informed by this research that the number of people in the UK using their mobile phones to manage their money (access bank accounts, make purchases and perhaps pay some bills) has doubled in just two years. Sounds impressive, but it has doubled from 5% to 10%, so hardly anything to get really excited about.

The research insists that the number will go past 50% “in the next few years as banks and retailers take advantage of the widespread adoption of smartphones, apps and 3G phone networks to deliver new services”. OK, given a rather huge dose of benefit of the doubt I will go along with that. Where I think it all goes tits up is when it insists that a major factor will be “the emergence of ‘tap-and-go’ payments using Near Field Communications”.

An emerging trend?

The report, Emerging Trends in Mobile Banking, discovered 57% have used mobile banking more frequently in the past year than they did in the previous year, 68% find banking on the handset easier than over the internet, and 70% are very keen to use their mobile to buy things. Really, very keen? That may change when they get to the shops and discover the mobile phone battery is dead. Or the shop in question doesn’t accept Nokia money, only Motorola money. “You want to pay by iPhone sir? There’s a 1.5% handling fee for that as Apple charge us extra” and so on.

I’m not knocking NFC just for the sake of it; I can see huge potential for the technology. But to suggest that most of us will be flocking to pay for stuff with it in just a handful of years from now is folly of the first order. Until a smartphone is as small as my debit card, has the same battery life and can be pretty much guaranteed to be accepted everywhere I go, I think I will be sticking with my flexible friend…

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