It is true, we are more than just a number. Unfortunately people don't tend to have unique names - for instance I share my name with the developer of a computer game from the 1980's called "Repton".
In the physical world, this doesn't really matter - if I need to give you some money I hand it to you in person: I have identified you, we've agreed on how we're exchanging money (cash), and I pass it over. A secure, trusted mechanism for exchanging funds.
Moving in to the virtual world, things start becoming more problematic. Two key questions that need to be asked for every transaction:
- Identification - How am I going to identify the beneficiary (or specifically, their destination address)?
- Method - How am I going to transfer funds to the beneficiary?
Trust is also important - do the beneficiary and I trust each other to share financial identification, and do we both trust the method to be used? Also, does the method support the identification that we wish to use?
Historically, our choices around these have been limited: identification has been via bank ID and account number, and method has been through one of a limited choice of payment networks.
I've previously written about how banks should continue to take advantage of these existing networks, rather than trying to build new, mutually exclusive ones; so let us consider the issue of identification.
As we slowly move towards an almost cashless society, the demand for "mobile" Person-to-Person payments is increasing. This means the number of exchanges where the payer and the payee do not trust each other enough to exchange financial identification (i.e.
bank ID and account number) is also increasing. If I choose another form of identification, can we both agree on the payment method, and does that payment method support the identification we wish to use?
An increasingly common approach to identifying "me" is either through my mobile number, or through my email address - information I am more willing to exchange with someone that I do not wish to share my banking details with.
So why aren't these 'ubiquitous' methods of identifying (the payment destination) universally supported? Certainly, there are options available to me: companies exist that allow me to send money to an email address; in some countries I can make a payment
directly to a mobile telephone number.
What is needed is a central repository that allows banks' customers to register their 'alternative' forms of identification. I would register my mobile number and my email address with my bank (and against my account). The bank would register these details
with this central repository. Ideally the organisation managing this central repository would then also operate as a central clearing house for the movement of funds to these destinations, so if I wanted to send money to a colleagues mobile number, I simply
instruct my bank to "Pay +447770123456 £50". This repository might also consider allowing Mobile Network Operators to be part of this payments infrastructure.
Finishing on the issue of trust, as this would be a global repository we have to consider who might host and run it. Not likely to be a new entrant, rather a mature proven company. We don't want to incur disproportionate fees for small value payments either.
It would be great if this company was already plugged in to the bulk of banks and financial institutions as well - to accelerate time to market.
Can anybody think of such a company?