Mobile payments: burning down the house?

I can’t fault her for trying.  I guess it seemed like a good idea and a bold step towards freedom from the bonds of 20th century banking.   

“She” is a member of my staff based in the USA; let’s call her Alice, ok so I changed the name to protect to innocent!  After reading that the Harris Interactive study released last week and the subsequent feature on Finextra, Alice felt there was some differing views and conclusions between the two. 

It all comes down to percentages, the fact that 53% of respondents have no interest in using their mobile telephones for banking or commerce. 

Some could say a large number and therefore the comment of "no interest". 

Alice took exception to this and feels that 47% is not an insignificant number.  In fact she wasthen  inspired by Finextra to buck the trend and be one of those intrepid souls leading the pack with a view to increasing the percentage.  All in the interest of research she assures me.  

She has already enthusiastically adopted e-banking (utilities payment due in Boston whilst traveling in Moscow?  Done!), and last night she was determined that with m-banking on the way, it was time to let go of the paper-based past and to go green.  Per her email to me this morning . . .  “ . . . 

They were old cheques (she spelt it checks), with the imprint of the bank that was swallowed by the bank that was swallowed by the bank that was swallowed by the bank that now holds my deposits.  They were technically still usable, however, so I had to get rid of them.    

Of course, I’m terrified of identity theft, so I couldn’t just throw them out.  My shredder doesn't cut small enough pieces to eliminate the account number, and just thinking about hours spent using some scissors to snip small cuts in hundreds of cheques (checks) made my hands ache.  So I came up with a foolproof, if a little radical idea . . . fire.   Turning my checks into ash was the perfect path to complete account number eradication, and it would be quick!  In mere minutes, my banking would be officially paperless!” 

So as not to burn down her house, Alice then set herself up at the kitchen sink with a fire extinguisher, my way of a glass of water, fanned out a book of cheques and flicked on her lighter.  That’s when she discovered that cheques don't so much burn as smoulder.  Instead of being consumed by flame, her cheques simply turned brown and issued an incredible amount of smoke.  The account numbers remained visible as she doused the whole mess with the water and threw open the windows.  

So what’s the moral of this story?  

Let’s go back to the Harris interactive study:  

Although contactless credit card purchases are currently performed by about 25% of mobile phone users with mobile access to the Internet, and 20% would be happy to have such purchases charged directly to their mobile accounts, fears about security abound.   

Among those surveyed, the biggest barrier affecting consumer acceptance of mobile banking and commerce is security concerns over personal data.  

Two-thirds (66%) of those interviewed express apprehension about using their mobile phone to transmit sensitive financial information. Nearly the same percentage, (63%) report fears about this medium exposing them to potential fraud and financial scams. 61% also worry about losing a mobile phone containing personal financial information.  

Add all these concerns to the US State department warning that money launderers and terrorism financiers may easily be able to use m-banking and payment platforms for their nefarious schemes, and it seems that mobile banking just isn’t safe enough yet for the average stateside banking consumer, despite industry analyst estimates, such as that from Celent in May 2007—that as many as 35% of online banking households will use mobile banking by 2010.    

For this kind of mass migration to become a reality in the US, we’ll need to see unprecedented levels of cooperation between mobile application developers, wireless carriers, bank IT departments, and the various regulators of all these parties to each transaction.   It will be interesting to watch, as the banks have clearly determined the business case is viable, and will continue to push things forward.  

As for Alice, well, she’s hung her cheques up to dry, and to ensure her personal security, I’ve given her tomorrow off so she can cut them into tiny pieces of confetti for use at her sister’s wedding in June.  After all, who am I to stand in the way of m- banking progress and recycling?