The Power of Headlines
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We are all familiar with the power of a good headline - it grabs our attention and compels us to read the rest of the story. In the world of printed newspapers, front-page headlines are there to sell papers. And it seems that ability to write a witty headline is a pre-requisite to getting a job at any of the UK's tabloid newspapers. Headlines also have the power to mis-lead. Just a few days ago, a news story caught my eye, which implied that 42% of the US POS terminals were infected by malware. With a healthy dose of disbelief, I clicked on the link and sure enough, it became clear from the article itself that 42% of all known instances of a single malware type were detected on the US terminals. The story and the headline's implication couldn’t be further apart. As someone who keeps an eye on the developments in mobile payments, naturally, I was intrigued by some other recent headlines announcing that "the UK banks were to launch mobile P2P network next year." Did I miss something? No, there was indeed a new announcement by the UK Payments Council, but it was talking about the same initiative announced nearly a year ago on 21st Feb 2012. And it became clear shortly thereafter that the service would likely be launched in 2014. As far as I can tell, the main piece of news this time is the list of 8 banks who have now committed to launching the service. Again, given that it was expected to be an industry-wide initiative from the start, it is no surprise to see all the major UK banks signing up to this, including Barclays, which has its own P2P service, PingIt. For our non-UK readers who may have missed the story last year, The UK Payments Council has commissioned VocaLink to build a central database that will allow bank customers to link their mobile phone number to their bank account. Having done so, they will be able to send a payment from their mobile phone by simply entering someone else’s mobile phone number and would not need to know their banking details. The actual payment would run over Faster Payments, a system that’s run by VocaLink and settles payments in nearly real-time. Is P2P really that important in the UK? Despite some early successes of PingIt, I think the jury is still out. Obviously, it simplifies making a payment to another person (or potentially, business) which is a good thing. However, in the UK it is already quite common to tell someone your bank account details for them to make a one-off payment. As I pointed out in my blog commenting on the original announcement, the ever-popular “splitting a restaurant bill” example is over-used – most people in the UK would settle the bill by asking the waiter to split the total onto multiple cards right there at the restaurant. And the popularity of Direct Debit drastically reduces the need to proactively pay regular bills. Paying to a small business/ merchant/ tradesman appears the most promising scenario, but there this payment method is going to compete against the new mobile POS solutions, which enable those same tradesmen accept cards, and more realistically, cheque and cash payments, the ingrained practices of today. Having said all this, it’s a very welcome initiative and it could be just a start. As the service grows, I would expect it will allow use of other proxies in addition to the mobile phone number (e.g. email, Facebook account, etc.) and will enable them to be linked to multiple bank accounts. And once the infrastructure is built, other services (e.g. merchant payments) can be developed, which would help the UK banks maintain their leadership in payments. I am looking forward to the real news announcing the launch of the actual service in 2014.