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@Russell Burke: You've brought up a very interesting - and potentially sensitive - anamoly. The difference between technical capability and business model is already exposing such anamolies in the two e-payments schemes in India. RTGS for corporate payments works in realtime and NEFT for retail payments is specified to work as a T+2 scheme. However, lacking a separate technology backbone, NEFT transactions are processed over the RTGS platform. As a result, some banks give NEFT credits virtually in realtime, whereas others do so only after 2 days!

In an ideal world, it should be possible to walk into the branch and resolve a tricky issue quickly. However, for around five to ten years, branch staff has been trained to divert customers visiting the branch to call centers or Internet Banking websites. As a result, while they might be able to offer a more conducive environment, it's questionable whether they have the tools and expertise to resolve issues any better than the nice men (or women) in Bangalore (or Dundee or Glasgow).

At this juncture, it would be going against the tide to try and do more via the branch network. Instead, banks should leverage Rich Internet Applications and other contemporary technologies as a more pragmatic way of enhancing the customer experience via Internet Banking and Contact Centers.

I think incorrect messaging from its key players is largely responsible for the yawning gap between forecasted and actual revenues of m-payments. Let me just cite two examples:

1. For decades, it has been natural for people to carry their wallets with them when they leave home. In fact, there are several people - me included - who feel uncomfortable if we don't carry our wallets with us when we leave home. Against that backdrop, how effective is it for m-payments providers to keep harping on the message "don't bother to carry your wallets" to promote their wares? It's not as though carrying wallets is such a big pain that we need alleviation from m-payments. 
2. For regulatory and / or other reasons, many types of m-payments in many countries are linked to a credit or debit card, which presupposes existence of a bank account. The one exception to this is GenY Mobile Payments like Bong and Zoku (more on them at http://sketharaman.com/blog/2009/06/25/mobile-payments-let-you-enjoy-convenience-and-security/). However, most of go to market strategies of m-payments providers abound with messaging around "financial services for the unbanked", "there are 2 billion mobile phones in the world but only 400 million bank accounts", and the like. This creates a lot of disconnect for someone who wants to use m-payments because they don't have or don't wish to use a bank account for making payments and discovers that they can't. 

Current reality seems to indicate that mobile payments is just another channel  - besides branch, ATM and Internet Banking - for initiating and monitoring conventional bank-based payments. I guess m-payments will be able to achieve its true potential only if and when it can truly break out of that niche and becomes a fully fledged, self-standing method of payment. 

For Google, such a step might be attractive since they've seen drastic reduction in growth projections of search business from a peak of 40% a year to 15-17% now. More details are available at

http://sketharaman.com/blog/2011/01/09/the-disintermediation-of-search/

But, I'm not sure why the customer should bother. Showing me search results is one thing, taking care of my money is quite another thing. Warts and all, banks are doing an okay job of the latter, so I wonder why customers should switch their accounts to "Google Bank". 

@Antti Larvala: Large MNC banks (ex: Citi) have been offering realtime cross-border retail payment transfers for several years now within their own branches across the world. So, I don't know if Google can do anything better there. However, if Google does the same thing between one of their branches and another branch of another bank, that would be great, but then I'm getting ahead of myself! 

Kudos to Union Bank. While many banks talk about doing everything to improve customer experience, very few actually go beyond paying lip service to it. By investing in such technology, Union Bank has proved that it puts its money where it mouth is, when it comes to demonstrating its commitment to improve customer experience.

On the one hand, PayPal and other alternative payment providers are making it easier to even put through cross-border payments by using only the email address or mobile phone numbers of a recipient. On the other hand, if the proposed EC measures go through, banks would be forced to ask payers to enter at least twice as many keystrokes to initiate a domestic payment via SEPA.

While Mr. Barnier might believe that "...making payments cross-border will become as easy as making them at home", I somehow can't escape feeling that "making payments at home will become as hard as making them abroad".

I hope this doesn't result in an overall drop in e-payments adoption and a return to cheques! Why am I suddenly reminded of a recent Finextra article that said that UK's Payments Council is planning to introduce a paper-based alternative to cheques? 

You've rightly pointed out that, when the average consumer if unhappy with a bank, they don't close down accounts but open a new account at another bank and use their old account(s) less and less. I can vouch for such a behavior from my own personal experience. In the earlier world of hefty fees for automatic overdrafts, this was neither a great strategy for customer retention nor for revenues.

But, in the post Regulation E world where banks are banned from levying overdraft protection fees except for consumers who opt-in for it, I am not so sure how eager banks really are to hold on to existing customers for checking accounts, and, therefore, whether they're likely to change much - Metro notwithstanding. 

I'm not sure if it's widely known that PayPal not only plays the role of a payment service provider but also that of an acquirer of card transactions. In its former role, the payer and payee must both have PayPal accounts, no bank is involved in the payment transaction, so PayPal is surely in a competing position with banks. However, I for one learned only recently that it's not necessary for the payer to have a PayPal account in order to make payments using PayPal to the PayPal account of the payee. In this role, payers pay with their credit cards, the payer's credit card issuing bank is very much in the loop, and it would appear as though PayPal is not in a competing position with banks.  

If TfL is trying to save the fees paid to the Oyster operator for topping up the card, how does it plan to save on the interchange fees it would have to pay to the card issuing bank when it begins accepting network-branded credit and debit cards?

@Finextra verdict:

If I were to guess, the paper alternative to cheque might be something like the German Ueberweisungsauftrag that used to be very popular when I was in Germany 7-10 years ago. In a paper version of SCT or SEPA Credit Transfer, the payer enters the payee name, bank account details, amount, and date into a preprinted paper form. After signing it in "wet ink", the payer hands over the form to their bank (unlike a cheque that is handed over by the payer to the payee). The payer bank converts the payment instruction electronically before forwarding it to the scheme (equivalent of BACS).

Although the payment originated in paper, it gets counted by the scheme as an electronic payment. 

This might just be the UK Payments Council's way of having its cake and eating it too!