Since the arrival of the internet as an effective payment method in the early years of the last decade, the UK payments landscape has remained largely unchanged. There has been much talk of the potential of making payment through all manner of devices – notably mobile phones – but relatively little action.
Now, though, mobile is finally emerging as a viable payment channel. A report by GP Bullhound in June estimated the mobile payments sector would increase at a compound annual rate of 56 per cent between 2010 and 2014, with the value of transactions rising from $108 billion to $633 billion, while the number of mobile internet users is set to overtake desktop ones by 2014 .
Research by Gartner, meanwhile, suggests the number of worldwide mobile payment users will hit 141.1 million in 2011; a 38 per cent increase from 2010. Much of this is down to companies finally investing in this space. Visa Europe recently unveiled its person- to-person payments system in conjunction with Monitise, while in the UK PayPal has developed an application that allows PizzaExpress customers to pay their bills automatically using a smartphone.
According to Martin Wilson, chief executive of mobile payments provider Luup, consumers and businesses alike have woken up to the possibility of making payments through their mobile phones. “Consumers are saying they can go online and interact with their friends, they can shop and send emails from a handheld device, so why can’t they make payments and manage their financial affairs?” he asks. “In the corporate world, SMEs [small and medium enterprises] are saying they need to be out on the street, meeting their customers and growing their businesses and they want to be able to raise invoices and make payments from their handheld device.”
Major retailers are expected to announce that they will be accepting contactless card payments throughout 2012 in the run-up to the Olympics
Mobile payments are also now extending to using phones to initiate contactless transactions at the point of sale. Earlier this year, a consortium including Google, Citi, MasterCard, First Data and Sprint teamed up to launch Google Wallet, allowing consumers to pay in-store by tapping their smartphone, while mobile operator Everything Everywhere and Barclaycard recently launched the UK’s first contactless mobile phone payments service, allowing customers to make payments for purchases under £15 in more than 52,000 retail outlets.
The use of contactless payments in general is also set to expand. According to the UK Payments Council, there are now around 16.3 million contactless-enabled cards in the UK and 66,500 point-of-sale terminals that accept contactless payments. “The contactless market is expected to grow rapidly over the next few years as more major retailers are expected to announce that they will be accepting contactless card payments throughout 2012 in the run-up to the Olympics,” says Sandra Quinn, UK Payments Council director of communications.
Over the next few years, the lines between mobile and online payments are likely to become increasingly blurred, says Samee Zafar, director at management consultancy Edgar Dunn & Company. “If you have an iPad, is that mobile or online?” he asks. “But online is very robust, particularly with the fact that on iPads you can now look at different products that you want to buy in a much better way and access reviews and recommendations.”
There are, though, lingering concerns about the widespread adoption of such new technologies. The decision by the UK Payments Council to abandon plans to eliminate cheques by 2018 should go some way to allaying concerns that non-internet users or micro-enterprises could be left behind, but fears around security still remain. “It is a genuine concern but it’s over-hyped,” says Mr Zafar. “It can never be 100 per cent bulletproof, but we have robust enough security levels for us to roll out these products on a commercial basis.”
Since the arrival of the internet as an effective payment method in the early years of the last decade, the UK payments landscape has remained largely unchanged. There has been much talk of the potential of making payment through all manner of devices – notably mobile phones – but relatively little action.
