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Brett,

I think what you are saying makes a lot of sense and indeed security to one side, making a payment as simple as possible takes away as much "hassle" as possible.

That said, it also perhaps makes it a bit "too easy". When you check your bank balance or credit card statement (or whatever) at the end of a month and see you spent much more than you thought you had - you might want some of that hassle back again. In other words - people still like some level of control over their spending. Making it too easy might not be such a good thing.

A guess another thing that occured to me reading this was where there's a dispute. There's no signature, no PIN. If I say "it wasn't me in the taxi" how can anyone really prove it was? I'm sure you've thought about this - but it's not immediately obvious.

Anyway - great article.

Jane,

I too had a good look over the paper. I feel sorry for you.

I agree there's a definite "political" slant to it. Especially with references to "the last government" and "the then-government".

If this is all triggered by the fact that the Payments Council got it wrong in trying to phase out cheques - so they should go. I wonder what that says about the government itself and all its political u-turns? Perhaps they should go as well?

All of that said, the creation of a new "regulatory body" shows political interference. Will this new body really be independent? The Financial Services Industry is one of the most powerful and important sectors in the UK. Also it has quite a few "high earners" who might want to fund the various political parties to "pull a few strings" behind the scenes.

Also you point about Luxembourg is valid. I know that PayPal already has a banking license - issued in Luxembourg.

Just like fraud finding security "loopholes", if there's a reason to sidestep or avoid regulation, given sufficient financial incentive - I'm sure there's a way of doing so. Be that moving operations to Luxembourg or making them virtual "in the cloud".

I think that trying to strong-arm the industry into following licensing terms and bureaucratic regulations will not encourage innovation. Quite the opposite.

I only see the likes of Metro Bank potentially benefiting from something like this.

It will be interesting to see where the debate takes us, but as you said "Industry consultation came out clearly in favour of the Payments Strategy Board so equally clearly the government has decided to do something entirely different".

So no matter what is commented back on this "consultation" - will it really make any difference or just be ignored in favour of a decision that's already been made from an ivory tower?

I think on this one it's a bit like a court case. You can find articles to support the fact that contactless is growing in importance...

https://www.finextra.com/news/fullstory.aspx?newsitemid=24924

... and articles to support the fact that the "boom" in contactless may not be as big as some people think...

https://www.finextra.com/news/fullstory.aspx?newsitemid=24884

I know there's a sense that in the future we will live in a "connected world" with intelligent televisions, fridges and everything else. Who knows? The future is hard to predict - though we may still play the lottery now and again.

I do agree, however, with the fact that the technology needs to be solving a problem. If we're talking about long queues at Starbucks - the issue is not how fast it takes to make the payment, but how fast they can make an expresso.

I agree that from a consumer perspective they are unaware of any "war". The banking and payments sector, however, wants to replace expensive cash. The problem is, as you rightly highlight, unless there's an advantage to the consumer... and to the merchants to do so - why would they change? If banks and card schemes charge for card and mobile payments and don't charge for cash - why would either consumers and merchants want to embrace this? Purely to have less cash in the till at the end of the day? I don't think so.

People may be prepared to pay a little more for convenience, but in hard economic times that's a harder thing to sell.

Also the "coolness" of waving your mobile or touching your card has already lost its novelty factor. In the end there needs to be a real and tangible benefit beyond avoiding a run to the ATM to withdraw cash.

You make a valid point. That said, I still think people like to have a fallback. If your card doesn't work or the merchant has a problem with their terminal and cannot take card payments - it's still good to have some cash in your pocket.

Technology may have advanced a long way, but it's still not 100% reliable. Cash always is.

I agree that "economic conditions" may be an influencing factor. Perhaps not so much due to "undisclosed cash-in-hand income" (though that may be part of it) and more to do with people simply budgeting.

When you have £50 cash you can't spend more than £50. That's your budget. When you have a card in your hand, be it a credit card or debit card with linked overdraft - you can spend beyond your budget.

Of course people could go with a prepaid card. They are popular to a point, but also tend to have fees and are certainly less well established than cash.

Michael,

I think your point is well made. For sure the industry can do more, but in many ways mobile wallets are a step forward from a physical wallet or purse.

In reading this though, the thing that struck me was your phrase "there is nothing stopping a criminal from making purchases immediately".

Now why is that? Simply because for CNP transactions - you only need details easily found on the card.

So whether it's a physical or mobile wallet - the real issue here is how easy it is to do transactions with nothing more than card details.

There needs to be more done to authenticate the person performing the transaction as being the actual owner of the wallet or card. The technology and ability is there - it simply needs to be used.

You talk here about how such a sale would "provide a monumental headache for Visa Inc in handling integration and regulatory issues".

Setting up a new bankcard scheme would also cause European Banks a "monumental headache", not to mention the cost involved. With all the problems the Eurozone and broader EU are having, I don't imagine there's really a lot of money for this kind of investment.

It may all be simply a ploy to have Visa in the US take the European Banks a bit more seriously and to listen to them when they talk about topics like SEPA.

Katharaman,

Thanks for your comments.

You are right that offerings such as Barclays Pingit link to
peoples bank accounts and for that matter are limited to the UK only. This
provides some level of security.

Regions such as Africa and the Caribbean are seeing strong
growth in the mobile space and one drive here is to offer something to the
unbanked or under-banked. In much the same way as Prepaid before it, the rigour
around KYC is much less. Equally international transfers, whilst not anonymous
certainly make it easier for money to “disappear abroad”.

I think your point that adding a payee is “not exactly the
strength of mobile banking” is a fair one. If it’s not easy to do, then it
makes sense to do this via another channel and then the mobile app is
restricted to only transferring or paying known recipients. Much better.

I think you also touch on an important point when you say that
the “perception of functionality-versus-security varies from channel to channel”.
You are right, though the perceived security and available functionality don’t
always align.

The main point I wanted to make in this is that part of the “perceived
security” when it comes to mobile banking and payments should include personal
security.

Clearly there are ways of dealing with this. They simply
need to be considered otherwise the mobile channel could quickly gain a
reputation for being unsafe even if technically secure.

Ketharaman,

Thanks for your comment.

I don't agree that muggers know nothing about bank accounts. Equally now with P2P payments possible directly to an anonymous mobile number it's all too easy to transfer funds to someone.

I do agree that the trend will be to leverage the features of a mobile phone via native apps to further strengthen the added value of the mobile channel and differentiate it from other channels.

You say that "security is not even a hygiene factor when a service provides compelling value". That may be true when we're talking about small amounts. If we are talking about larger amounts of money, that's another story. I still like the have a locked door on the front of my home.