The person-to-person mobile payments service being prepped by Britain's banks for a launch later this year has been christened Paym.
I hope it's a "working title": did ya pay'em sounds way too "rustic"...
The service sounds like a nationwide Pingit, i.e. it's not just about using a mobile phone number instead of a/c number and sort code, but (more) about simple interface for Faster Payments.
C2B, B2C and B2B payments are next, aren't they?..
An innovative way for financial institutions to enable their customers to move to more user-friendly bank digital channels.
Although not revolutionary as PayPal points out and similar to ClearXchange with the option of C2B on launch.
B2B payments with telephone number web references as proxies for business account sort codes and account numbers to link remittance for instant retrieval (PDF or Data) could be a future option.
I don’t agree with PayPal's and
other's comments that this system is not revolutionary. Obviously PayPal will
say this as it is direct competitor. Yes, it is yet another mobile based P2P payment
service which PayPal is for long time. But let’s face it; PayPal or any other service
can never reach the heights to which this potentially can.
Let’s ignore whether you make
payment from phone or e-banking or phone banking; that is just channel. Not important.
Not the reason why this service is different. The core strength of this system
is that it substitutes account id + Sort code for a commonly available identifier,
Phone Number. All other systems (pingit, paypal, zapp) which provide some way
to substitute for account id + sort code, are close ended systems where both originator
and beneficiary are required to be members of the network/service, and are
required open an account or create an Identifier with that bank or P2P
provider. This service provides phone number as direct substitute for my
CURRENT account. Not my PayPal or Zapp ID (which I cannot expect my grandfather
to go to website and create) and not my virtual account on a website. This
links My Phone Number and My Salary Current Account. This is the key thing.
Once this service gets
penetration and all banks join in (like FPS has over last 6 years) the central
database maintained with Vocalik will be a revolution. A common substitute for
account number + sort code without any boundaries of bank network/service
provider will create ripples. Give it few years.
To cite a corollary; chat based
communication systems like yahoo chat, Google and Facebook chat have been running
for many years. Still WhatsAapp took the cream of the market in only few years.
Why? Because it does not ask you to create a specific account or to be part of
a closed user group. Anyone with phone number is direct member and is directly accessible!!
So going forward, anyone who is
in my contact list is a potential payee with full payee information already available
in my phone book memory. Phew!!!!
If this is not revolutionary, I don’t
know what is.
Good point, Kushal. But...
Square allows to pay via an email address. I bet most people remember more email addresses than mobile numbers. Likewise, any payment service provider could allow to pay another party using just that party's mobile numbers. It's the hoops which the payee
needs to jump through in either case to get the payment, especially KYC, that make all the difference.
Paym is a Government-mandated (!) nationwide (!) service that uses existing KYC records (!) and Faster Payment rails (!). THAT is hard to beat... IMHO.
Paypal charges a fee for their P2P payments (or at least they did when I last used it in August 2013). I'm guessing Paym is going to be free a la Pingit, which definitely makes it 'evolutionary' if not 'revolutionary'.
I agree Alexander. You have put this very elegantly. Government mandate behind this will make a key difference.
Do you think that can affect the prospects of other P2P services? For e.g., what is the point of Barclays Pingit system after “Paym” is up and running?
That's exactly the point, Kushal: how can any P2P service compete with Paym in the UK?.. Cost-, coverage- and price-wise.
That goes beyond pure P2P. Think about Zapp - it's an interface for Faster Payments via bank app. With Paym, one can create Zapp alternative using the same rails... That's your C2B and B2B...
One can also use Paym to fund, for example, transit application (we are looking to do that with MultiPass).
Alexander, you have put is so well.
How can any P2P service compete with Paym in the UK when the Government is behind it? .......It's a real game-changer for banks.
Leverage the Faster Payment rails, develop user-friendly digital products and services that provide customer value and UK banks will once again be at the heart of payment processes.
And it goes beyond that, Brad (thank you for your nice comments): card networks are not part of the picture... Considering that Vocalink are keen to "export" Faster Payments outside the UK (they already have tangible traction in that respect), it's not an
(instant) V/MA killer, but...
When you have virtually instant payments, that means (almost) "self-settlement" and "self-reconciliation".
Once the payment world truly understands that you should not be charged for changing database records (especially ad valorem!!), things will never be the same...
Alexander, you read the situation well.
What do you think will happen on the B2B front with remittance data?
Depends on the definition of "remittance"... If we are talking "cross-border", we are years (2-4) away from any practical solution. IMHO.
Alexander, what is currently being applied in Australia for same day or overnight settlement is to introduce a web reference e.g. tedipay.p.vu (could be a mobile number ---------.p.vu) that is included in the 16 byte decription field in Australia's payment
The web reference is used to identify Tedipay (the payer) and indirectly link any amount of data reconciled to the payment and uploaded or hosted by the payer during payment initiation process (data can be hosted by the payer or externally
e.g. a service provider, even a bank or bank issuer could host the data).
Armed with the reference and payment details provided online or hard copy statement or advised by email, the payee double clicks or pastes the reference into a browser and authenticates at a data exchange web page provided by the data host and the underlying
data is made available in a useable format (e.g. PDF, XML etc.).
Mobile apps are under development to streamline the process and web services are being applied (one -click download) by corporates and investment funds for STP.
Authentication involves providing the target account details (could be target mobile number), the value of the transaction and payment date and this together with the web reference enables the smart application to located and present the data in the required
Providing the integrity of the reference can be maintained I think it will work for cross border payments
Is it obvious that Sender needs PayM and Receiver does not (even to cash out)? Otherwise, this is as closed-loop as PingIt or PayPal. On another note, it'd be interesting to watch how PayM will handle the fairly common situation of a bene having one mobile
number and multiple bank accounts.
I believe the banks compete on who holds the registered PayM receiving account. As a consumer I don't generally care which account I get paid into as I can move the funds around thru my app. In terms of sending account, guess you just select which account
you want the funds to go from and some nice wording like "your payment will go directly to your phone contact's bank account if they have registered their number" would remove any concern on has my recipient registered or not.
Back in the early days of mobile phones SMS messages could only be sent to phones on the SAME network and were little used.
Once the networks interconnected and people saw how easy it was to send a "Text" then SMS volumes took off exponentially, and largely replaced actual phone calls for many people.
I think that Paym (not a great name IMHO) will have the same impact on mobile payments that PayPal and PingIt have so far not quite manged to achieve.
I agree with Alexanders assessment of the USPs:
Government-mandated (!) nationwide (!) service that uses existing KYC records (!) and Faster Payment rails (!).
Evolution or Revolution is a moot argument - mass adoption will surely follow.
Personally, I'm a big fan of interoperability. But, in this day and age where proprietary walled gardens like WhatsApp are threatening the future of interoperable SMSs, I'm pleasantly surprised that interoperability is still considered valuable.
Competitive base, double OTELondon, UK
© Finextra Research 2015