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29 April 2014Gareth Lodge
Paym is a UK payments industry initiative to allow mobile payments to be made just using a mobile phone number. Those of you who watch the UK industry will note that Barclays launched a similar service, PingIt, 2 years ago, which has been widely lauded both in the payments industry, but also in the press. This blog is less about these services, but more about the press reaction to innovation generally. Payments innovation is tough, and a new payment method is even tougher. Payments is a 2 sided network. That is, typically both parties have to be part of the network, and that there have to be enough people in the network to make it attractive. That creates something of a “chicken and egg” – how do you create an instant network? To that end, I was disappointed with the BBC coverage. Firstly, rather than 20m customers won’t have access for awhile, it was awhile before it said 30m would have access from today. A rather different spin, particularly when PingIt launched with no customers guaranteed that it would work! Will Paym succeed? I hope so. Any innovation is to be applauded, and I do hope this starts eroding the numbers of cheques written. My enthusiasm is tempered by a couple of thoughts. I trust these are taken not as negative, but highlighting the challenges ahead for the launch of ANY new payment scheme. Firstly, how often do I need to pay another person money? The infamous splitting of a dinner bill in the UK is rare – instead of cash, we just all put our debit or credit card in. Secondly, the service is limited to smartphones, and most banks already have apps which allow payments to be made. Admittedly, some banks (I’m talking about you Halifax!) have an app so poor even writing cheques becomes appealing! That leaves the masking element – using a phone number, not your banking details. I’m not sure how much of an issue that is for most people. As most payments are push payments, you have to question why the recipient wouldn’t want you to see their details. And as the majority of debit cards have the banking details on them, I’m not sure the argument about simplicity is strictly true. There is a formula that checks an account number is valid for a sort code. A mobile number is only 3 digits shorter, and can’t be checked, nor can you tell initially whether its registered for the Paym scheme. It’s a minor quibble, but consumers are fickle – it will only take one issue early in their use of the system to revert back to the old method payment.