Sibos 2011 - Tuesday - Going Mobile

Sibos 2011 has been talking about innovation and not just at Innotribe. Google Wallet, Movembank, changing the business model for banks and a new approach to regulation have all been discussed.

One topic which seems important for vendors and service providers is that of mobile payments. Firstly, what do we mean by the term mobile? Many readers assume this means initiating a transaction on a cellphone. Some assume it’s a “portable device as an electronic credit card” and others it’s just mobile banking. And we haven’t yet talked about mobile payment terminals  such as contactless phone terminals or Square. However, we need a definition because “making payments while I’m out and about” could mean cash and cheques/checks too. Perhaps we should restrict the definition to only those methods which are efficient?

This Sibos has seen a many announcements, including Google Wallet, and some practical demonstrations of how they can or could work. Vocalink and Luup are amongst some of the vendors I’ve spoken to.

In essence paying using a mobile device is about replacing a cumbersome interaction with something slicker and easier for consumers to make and for retailers to take. No-one is yet suggesting that corporate treasurers will be initiating multi-million pound disbursements solely on a mobile device although, with the proper identity and fraud prevention solutions, that may come. The clunky handing over of notes, coins or cheques needs to be replaced because it’s inefficient, both in time and processing costs. And by replacing the inefficient interaction with a secure, electronic handshake the process becomes more reliable.

NFC is a term that has become synonymous with mobile payments for a section of the industry however it is just a technology to replace one party telling or giving something to another. I agree that by removing the need to insert a device into a reader probably saves around a second or so on every transaction, it’s not just that which improves the interaction. By having no moving parts or contacts to get corroded, NFC gives us more reliability and potentially more integrity over the card to terminal connection. However on its own it does not create a payment for us. There is no reason why NFC could not be used to exchange bank account data for setting up a direct debit or e-mail address to pick up a customer’s profile.So while the underlying technologies are there it is still unclear how consumers will want to use them, but they shall want mobile payments to be simple and secure.

It’s therefore important to ensure that we do not forget the fraud prevention mechanisms at the point of purchase and, as part of that, perhaps we need to build in the capability to confirm the identity of the individual, not for buying a newspaper or a coffee.

So while it is yet unclear which mobile payments mode, technology and provider will win, it is vital that we build in the safeguards that we already use for our existing payments mechanisms to ensure security, reliability and efficiency remain high.