Mobiles mean less cash

Think about last week­end. Like mil­lions of oth­ers, you will prob­a­bly have vis­it­ed a hole-in-wall for cash to pay for low-val­ue items. An esti­mat­ed 21 bil­lion such cash pay­ments are made each year, 80 per cent of which are below £10.

The sheer scale of these trans­ac­tions requires the cre­ation, trans­porta­tion, col­lec­tion and, ulti­mate­ly, the destruc­tion of about a bil­lion bank notes annu­al­ly, with a huge atten­dant envi­ron­men­tal impact, all of which is paid for by the tax­pay­er.

But all that could be about to change. Accord­ing to the Pay­ments Coun­cil, by 2018, the vol­ume of cash pay­ments is pro­ject­ed to fall by 20 per cent, after adjust­ing for infla­tion. And in five years, cash is like­ly to make up less than half of UK trans­ac­tions (45 per cent) for the first time. Wel­come to the mobile econ­o­my.

You may already be one of the users of Bar­clays’ “wave and pay” sys­tem that allows pay­ments to be made with­out chip and PIN, or per­haps make mobile pay­ments (m‑payments) with Bar­clays’ Pin­git, which allows up to £750 to be sent via a smart­phone? Or your favoured option could be the Orange Quick Tap ini­tia­tive with Every­thing Every­where and Bar­clay­card, which offers UK NFC (near field com­mu­ni­ca­tion) pay­ments of under £15 at retail­ers such as Pret A Manger, EAT, Sub­way and McDonald’s?

Well, imag­ine if you could make these pay­ments with­out cash by sim­ply using your smart­phone as a wal­let? That is the promise of NFC, which allows your phone to wire­less­ly com­mu­ni­cate with a retailer’s till or oth­er phone users. And NFC is only one of a range of m‑payment sys­tems that now offer you con­tact­less pay­ment options that togeth­er are devel­op­ing the dig­i­tal econ­o­my, with your smart­phone or tablet PC at its heart.

“Con­sumer behav­iour is begin­ning to shift,” says Mary Car­ol Har­ris, vice pres­i­dent and head of mobile strate­gic alliances at Visa Europe. “Con­tact­less cards issuance and accep­tance tech­nol­o­gy are not only pro­vid­ing the infra­struc­ture for future mobile NFC ser­vices, they are eas­ing con­sumers into the habit of using a con­tact­less pay­ments device to pay for goods rather than using cash.”

From brows­ing goods to check­out, deals and offers, the oppor­tu­ni­ty is enor­mous for con­sumers, retail­ers and finan­cial insti­tu­tions

Accord­ing to Juniper Research, smart­phone ship­ments will increase by 40 per cent this year with m‑payments expect­ed to exceed $180 bil­lion (£114 bil­lion) by 2017. “NFC tech­nol­o­gy is trans­form­ing mobile phones into pay­ment devices that will change the way peo­ple live, work and play,” says Niki Man­by, Visa’s head of emerg­ing prod­ucts in Asia Pacif­ic, Cen­tral Europe, the Mid­dle East and Africa.

While Jim Wadsworth, head of mobile and dig­i­tal pay­ment at Accourt, adds that NFC is about more than just pay­ments. “NFC enables oth­er ser­vices too, such as secure access con­trol, the pro­vi­sion of infor­ma­tion via ‘smart posters’, and joins togeth­er dig­i­tal social media with the real world – for exam­ple, it will enable users to ‘like’ and share any­thing they see in the real world where it has an NFC Face­book tag,” he says.

The use of bar­code and QR code scan­ners to quick­ly cap­ture prod­uct infor­ma­tion is also on the rise. In addi­tion, m‑commerce is deliv­er­ing a lev­el of per­son­al­i­sa­tion nev­er seen before. Retail­ers can now detect when a past cus­tomer walks into their store – a cof­fee shop for instance – and know what they ordered last time. Some US stores are even allow­ing pre-order­ing, so that as a cus­tomer hur­ries towards a café’s doors, their lat­te and muf­fin are already being pre­pared.

And with more of us stor­ing our dig­i­tal lives online in the cloud, it was bound not to be too long before pay­ment sys­tems moved there too. A good exam­ple is Google’s Wal­let, which had some lim­i­ta­tions at its launch (not least, a lack of com­pat­i­bil­i­ty with smart­phone hand­set mod­els). Now that Google has moved its pay­ment plat­form to cloud, these have been rec­ti­fied. Cloud-based solu­tions, where pay­ment infor­ma­tion is held cen­tral­ly, mean that deb­it or cred­it cards can now be used over mul­ti­ple devices.

Chang­ing hand­sets or buy­ing a new tablet PC? No prob­lem, as you can keep on mak­ing pur­chas­es with your exist­ing pay­ment infor­ma­tion. This kind of seam­less inter­face between your pre­ferred pay­ment method, the cloud and the mobile device in your pock­et is the future of m‑payments and m‑transactions.

“Retail­ers’ e‑commerce teams are buy­ing into m‑commerce with app and enhanced web­sites, and their retail store teams are broad­ly pilot­ing or rolling out con­tact­less pay­ment to work with the cards that are being dis­trib­uted by the banks as a stan­dard on cred­it and deb­it cards,” says Neil Gar­ner, founder and chief exec­u­tive of Prox­a­ma. “They are installing con­tact­less pay­ment ter­mi­nals as part of their nat­ur­al upgrade plans. This is all hap­pen­ing today, with M&S and The Co-op among those who have announced their inten­tions in this area.”

How­ev­er, Richard John­son, group strat­e­gy direc­tor of Moni­tise, cau­tions that too many indi­vid­ual solu­tions will hin­der cus­tomer adop­tion. “This space is nev­er going to flour­ish if it’s full of a pletho­ra of closed-loop schemes where you have to have to open a spe­cial account, use a cer­tain device or shop in only one type of store or where mer­chants look at solu­tions indi­vid­u­al­ly,” he says. “In the long run, con­sumers are going to demand inter-oper­abil­i­ty; pay­ments have got to be seam­less and they need to ‘just work’.”

If banks, pay­ments providers and busi­ness­es get it right, then Ms Har­ris of Visa Europe pre­dicts that, with­in a decade, “an entire­ly new shop­ping expe­ri­ence” will be cre­at­ed. She says: “From brows­ing goods to check­out, deals and offers, the oppor­tu­ni­ty is enor­mous for con­sumers, retail­ers and finan­cial insti­tu­tions around the world.”

Pay­ment plat­forms, such as Pay­Pal Mobile, Ama­zon Pay­ments, Google Wal­let, MasterCard’s Mon­eySpend and, lat­er this year, V.me from Visa are cre­at­ing a vibrant and rapid­ly evolv­ing ecosys­tem of pay­ment options.

For con­sumers the choice can be con­fus­ing, but expect the larg­er play­ers, such as Pay­Pal, the banks and cred­it card providers, to remain at the fore­front, with new pay­ment providers, like Twit­ter co-founder Jack Dorsey’s Square, to offer sys­tems that are tai­lored for phone and tablet users. What seems cer­tain, how­ev­er, is that the future of pay­ments will be increas­ing­ly mobile.

SMARTPHONES

Will chip bear fruit for Apple?

Until recent­ly, the smart mon­ey has been on Apple incor­po­rat­ing a chip in its next iPhone for short-range wire­less trans­ac­tions, but lat­est reports may have cast doubt on such spec­u­la­tion, writes Dave How­ell

At the moment NFC (near field com­mu­ni­ca­tion) has failed to set the world alight, at least out­side Japan. In the UK and US, all eyes remain on Apple, who some pre­dict will make the next gen­er­a­tion iPhone an NFC-enabled device.

Retail­ers have already adopt­ed the iPad into their stores across the US as fast and effi­cient next gen­er­a­tion tills. NFC would be the next log­i­cal step to take, as the avail­abil­i­ty of a mass-mar­ket smart­phone with NFC capa­bil­i­ty would kick­start the NFC mar­ket as a whole, and dri­ve retail­ers and the pay­ment pro­cess­ing ser­vice providers to devel­op their sys­tems rapid­ly.

Mean­while, for con­sumers, an NFC-enabled iPhone would final­ly deliv­er an elec­tron­ic wal­let into their hands. If “wave and pay” from Bar­clays was a rev­e­la­tion to shop­pers, sim­ply mov­ing their smart­phone near a pay point will be noth­ing short of a rev­e­la­tion.

Retail­ers have already adopt­ed the iPad into their stores across the US as fast and effi­cient next gen­er­a­tion tills

“Mobile tech­nol­o­gy has long been a rev­o­lu­tion­ary force in our lives and NFC-enabled devices, such as the Galaxy S III, will fun­da­men­tal­ly change the way we pay,” says San­dra Alzetta, senior vice pres­i­dent of mobile at Visa Euope. “The future is mobile and cash usage will con­tin­ue to decline, as peo­ple use their devices to man­age their mon­ey, shop and pay.”

SCAN AND BUY

Quick response to mobile technology will boost sales

The dig­i­tal econ­o­my means link­ing the tra­di­tion­al retail envi­ron­ment with cus­tomers who want to shop on the move with their smart­phone or tablet. Many busi­ness­es are now using these plat­forms for inter­ac­tive ads and even to dri­ve direct pur­chas­ing.

Think about the last time you stood in a store and would have loved to access more infor­ma­tion about an item on the shelf. Bar­codes evolved into QR codes, which per­son­al devices can scan for more infor­ma­tion. Now Snap­Tags are offer­ing brand own­ers a new way to place their company’s brand­ing with­in a code which smart­phones can scan.

Pub­lish­ing is also embrac­ing the dig­i­tal econ­o­my. All the major pub­lish­ers have an iPad edi­tion of their lead­ing titles. But this doesn’t mean that print is dead – far from it. Pub­li­ca­tions are using QR codes to offer read­ers an inter­ac­tive expe­ri­ence right on the page.

Aug­ment­ed real­i­ty, mean­while, looks set to become even more cre­ative. New busi­ness ser­vices, such as Cross­fy, don’t even need spe­cial codes to be print­ed. The pub­lish­er decides which images in their pub­li­ca­tions will be inter­ac­tive. When a smart­phone sees these images, the read­er will see addi­tion­al infor­ma­tion, move to the brand’s web­site or see pur­chas­ing infor­ma­tion for the prod­uct or ser­vice.

Think about last weekend. Like millions of others, you will probably have visited a hole-in-wall for cash to pay for low-value items. An estimated 21 billion such cash payments are made each year, 80 per cent of which are below £10.

SMARTPHONES

Will chip bear fruit for Apple?

SCAN AND BUY