Phone payment arrives with bang or was that a tap?

22nd May 2011  

Cardchoices announced back in February 2011 that the technology was in development to allow payment for low value goods and services using a smartphone or ‘mobile wallet’ linked to your credit card.

The first mobile phone with the new ‘Near Field Communications’ (NFC) capability, the Samsung Tocco, along with services to support it, was launched in the UK yesterday to mixed feedback from retailers and consumers. ‘Quick Tap’ is the name given to the service being pioneered by the Orange mobile phone network working with Barclaycard but other networks and card issuers have competing systems on the way. It’s been known for sometime that web overlord Google has been developing a similar system for its Android handsets.

At the launch of Quick Tap the protagonists would have us believe that payment by mobile phone is likely to become a viral phenomenon overnight and that it will rapidly spawn a cultural change in the way that we pay for things. The concept of using your mobile phone to pay for every day items on the move like travel tickets or fast food sounds like a great idea, but will anyone actually make use of it?

Feedback from shoppers yesterday was luke warm and centred around the fact that the system wouldn’t free them from the need to still carry cash and a credit card. This is because the maximum value of transactions on Quick Tap is only £15, and few retailers currently can accept payments made by mobile phone. As these kind of technological miracles are rarely free in real terms to the user, where’s the great advantage to the public?

Consumers and retailers alike are also concerned about security. In the last 4 years point-of-sale credit card fraud has been significantly reduced by the adoption of Chip and PIN technology – the new mobile phone payments systems don’t require the user to enter their pin to approve transactions. All the user has to do is hold a suitably enabled mobile phone to a reader on the retailers counter a press a key on their phone screen to confirm the transaction.

The technology works in similar way to Contactless Payment which does have a following, particularly in big cities. At the moment to take advantage of the pay-by-phone technology, the user has to have an existing Barclaycard or Orange credit card account for their mobile wallet to be linked to. Card holders have to transfer ‘credit’ to their mobile wallet from their credit card account a maximum of £100 at-a-time. In theory at least if an enabled mobile phone gets lost or stolen the maximum financial downside is limited.

The retailers who’ve already signed up to be part of the scheme clearly show the part of the market that Quick Tap is aimed at. Those already on board include Pret-a–Manger, EAT, Little Chef and McDonalds. Some Boots stores are also trialling the scheme. According to Barclaycard some 50,000 retail outlets already support the scheme, but we suspect that is in fact the number that are currently equipped to handle Contactless Payment which works through the same design of terminal. Curiously the National Trust has also been one of the first to adopt the technology.

A similar kind of mobile wallet know-how has been in use in Japan for several years. Mobile operator NTT Docomo invested millions of Yen trying to encourage take up of the services but statistics currently show that only 10% of handset users make use of the facility.

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