By Andrew Hull, Strategy Director, Pocket App
The payment revolution is officially upon us. I remember reading an article a few years back that claimed mobile payments could potentially replace cash by 2016. At the time it seemed a somewhat ambitious prediction. However, with the surge in contactless payments in 2014 accounting for annual transaction volumes exceeding £460 million (according to the latest figures from Visa Europe), which is a 263% increase on the previous year, and the value of those transactions being 283% higher, the writing already appears to be on the wall for cash payments.
Exponential growth of mobile and the way in which it is now intrinsically linked to everyday business and consumer life, added to the plethora of mobile apps which are revolutionising the way in which consumers can pay for goods and services, means that the once essential physical wallet is one step closer to becoming redundant. With all of this technology in the palm of our hands mobile payments make a lot of sense. There is no doubt that it is much more convenient to connect our bank accounts to our phones and pay bills, make deposits, transfer money or pay for goods.
I think it was Rob Skinner of PayPal UK that said: “Mobile is the future of money. If we view the first era of payment as cash and cheque, and the second as debit and credit card, the third is most definitely mobile.” The natural progression of contactless payments is using your mobile to provide this function as opposed to your debit or credit card. Our mobile phones are with us at all times so as we use them to overcome more and more challenges, such as payments to retailers, travelling on public transport and a myriad of other things, it’s natural to assume that the need for physical cash will diminish.
With the industry awash with catchphrases such as ‘mobile wallet’ and all of this talk of the death of the cash payment, just how easy is it to survive a day with no physical cash? Is it possible to leave your wallet at home and get through a typical working day?
We thought we would give it a go and put this theory to the test. Here is what I found:
Travelling to work in the capital without cash is simple as Oyster cards are commonplace. Buses in London have long since supported contactless NFC payments and it is now possible to use contactless payment cards on London tubes, trains and the DLR.
Buying a coffee also couldn’t be easier. There are an abundance of apps that can be downloaded to your smartphone. I chose the Starbucks app, which allows you to charge up your account and the cashier scans the barcode that appears on your phone’s screen and the money is deducted. Likewise to buy lunch I used the droplet virtual mobile account which is accepted by numerous retailers and eating establishments. The secure mobile payments platform allows you to make payments with one click of a button on your smartphone.
Going shopping is also effortless when using the PayPal app. This virtual account can be linked to a credit card, debit card or directly to your bank account and enables you to buy goods, order in store or pay people. The hailo taxi app then makes getting home a doddle, you simply add your credit card details to your account and you are then billed automatically. Voila, I got through my cash-free day quite effortlessly.
So what are the major mobile apps that are changing the way we pay?
- Visa payWave - A contactless, NFC compatible technology that enables Visa cardholders to simply wave their mobile device in front of a contactless payment terminal to make a payment.
- PayPal - The PayPay app allows users to send payments using a mobile phone number or an email address. It also lets users check their PayPal account balance and shop in selected retailers and restaurants. It triggers a payment from your PayPal account or your bank account or credit card.
- Pingit - A payment app launched by Barclays in 2012 that allows registered users to send and receive money using their mobile number, without sharing bank account details. Users do not have to be a Barclays customer. It is also possible to buy goods from selected retailers by scanning a QR code or using Pingit at the checkout.
- Zapp - Zapp will be integrated into a selection of banking apps this year allowing shoppers to make purchases direct from a linked bank account. Initially available for online shopping, Zapp is expected to work in stores by 2015. The technology will generate a secure token to authorise a payment from the shopper's bank account to the merchant.
- Paym — Launched in 2014, Paym allows users to link bank accounts to mobile phone numbers, enabling transfers through a banking app without sort codes or account numbers. Bank of Scotland, Barclays, Cumberland Building Society, Danske Bank, Halifax, HSBC, Lloyds Bank, Santander and TSB Bank will offer the service.
Technology is enabling us to not only simplify our daily lives, it is also allowing us to deepen our connections to merchants and each other. Is it really the end of cash payments as we know it today? Maybe not quite yet, but more and more consumers are turning to cashless and mobile payments. We also proved that you can certainly survive a day in the capital with no money in your pocket.