Piers Fawkes: Will Pay-By-Phone Be An Albatross For The Banking Industry?
The rush to adopt the technology seems to mirror the electronic industry's desire to force 3D TV on viewers.
I’ve noticed that Europe is witnessing a lot of acitivity when it comes to large financial organizations getting into the pay-by-phone space. Recently PSFK reported the launch of the Pingit service from Barclays Bank. The service would allow customers to send money to each other easily using their phones.
Now Telefonica-owned O2 is planning to launch in the next three months a mobile money transfer app to rival Barclays’ service. This service would be offered to all banks to use. Visa is also planning a partnership with Vodafone. The new mobile wallet service to allow mobile phone customers to pay for goods and services using their handset. It will be available across all 30 countries that Vodafone operates in, starting with the UK, Germany, the Netherlands, Spain and Turkey. No doubt US financial corporations are watching and learning. Google is already testing its NFC service with a handful of retailers.
When it comes to pay-by-phone (and especially tap-to-pay) systems, there’s a lot of rapid deployment going on around the technology but I’m not too sure the customer is ready for. It reminds me of the move in the last few years by electronic companies to develop and market 3D TVs – maybe years before people seem ready to own one (and that the majority of programming will be in the required format).
Like the 3D TV space, at PSFK we haven’t seen much experimentation at the fringes around phone payments. While Sony and the others rushed to create their new TVs, we noticed that the hacking community were more interested in the interaction between the viewer and the set. Gesture and now sonic-interface have been explored by researchers, start-ups and other creative minds. Evidence of hacking of 3D TV technology by influential groups like new media artists is very hard to find. Microsoft Kinect‘s popularity and success is a because the natural user interface system followed years of gesture experimentation on the fringes. For Microsoft, it was the right time and the right product.
The experimentation at the intersection of NFC, RFID and mobile phones still seems to be very much at the storytelling and information gathering stages of the purchase path. At a tap of a phone, systems explain a product’s background or they tell you where you can get it. There are not a lot of examples of hacking culture exploring tap-to-pay payments.
For me, tap-to-pay also has a number of other challenges: it seems like a big win for the banks but I don’t quite see the huge advantage for consumers. The benefits are lopsided. It’s not like credit cards are heavy to carry or difficult to use. Also, cards offer choice at every payment occasion. The pay by phone movement seems to be about restricting your choice – and that could be where it hinders adoption.
From what I have read, it seems to be that when we will have the opportunity to pay-by-phone we will only be able to charge to one bank (the bank the phone maker, software or network is associated with). What happens if the payment is a business expense or something that should go to you and your partner’s joint account? Do banks, networks and handset makers expect us to navigate a menu of options on our phone to find the right card? Surely just picking the right piece of plastic from your wallet would be quicker and simpler? Oh, it is.
Maybe banks and phone companies should not run away the user-friendly card format but look at the digital connection between them. Maybe cards cannot be used outside 5 feet of their owner’s phone. Maybe phones get pinged with loyalty point balances and other bonuses upon a swipe. Retailers and finance companies need to look at current behavior and adapt around it, rather than expect people to change because of their technology.