24 September 2015
How will people use their mobile phone to pay?
Over the last generation we have become a debit card nation, but will the next generation stay with their bank or will they shift away to new technology and new kinds of payment? Well, it hardly takes a crystal ball to forecast that the mobile phone will play the central role in the evolution of the retail payments sector over the next few years. We all know that. What is up for debate is how will people use their mobile phones to pay.
Right now there’s a lot of focus on “tap and pay” using iPhones and soon Samsung and Android phones although the biggest impact of new technology will be away from the till in shop. These new technologies, such as Apple Pay, will soon mean that we can pay online with the same fingerprint we use in store. That’s a big deal, and if we look at little further down the road we can see that the real trend is for payments to disappear inside the apps that we’ll all be using for browsing and buying. Just as my card has disappeared inside my Hailo app and my Starbucks app, we won’t think about cards and numbers and PINs when we pay any more. In Tesco, I’ll use my Tesco app and my fingerprint and that’s that.
But where will the Tesco app get the money to send to Tesco? Will it be using Sterling or Bitcoins, credit or prepaid value, Brixton pounds or MasterCard? The recent VocaLink Next Generation of Payments Research shows that almost half of UK customers said that they were more likely to use a new payment mechanism from their own bank (double those who are more likely to use a new payment mechanism from the government!) and this reinforces the view that the “dinosaurs” will embrace the new technology and take on mobile upstarts successfully: when I buy something in Tesco, I want the money just to go from my bank to Tesco’s bank account safely and securely. Tesco want the same thing, so our interests are aligned. It may not go via a card - I could go via a Zapp PaybyBank app or PingIt or Paym or whatever - but to the customer it’s debit all the same.
Yes there are lots of cool new ways to pay for things, but for most customers in most circumstances, a new way to access their own money in their own bank account is more appealing than alternatives and since the smartphone provides the obvious mechanism for them to do this I think we can see that the next generation of debit product will be in our hands .