Mobey Forum’s report, “Game of Phones: The Giants’ Power Play in Mobile Payments” highlights that it was only a few years ago that NFC based mobile payments were unpopular, but now because of the likes of Apple Pay, Samsung Pay and Android Pay, over 50% of transactions are made using this technology in the UK. bobsguide spoke to Sirpa Nordlund, Executive Director at Mobey Forum, about the rise of mobile payments, attitudes towards blockchain and cash across Europe and her predictions for the future.
“The peer to peer lending and small business lending sectors are both actively developing in a direction that is bypassing the traditional banking infrastructure almost entirely,” Nordlund said. She went on to say how only using banks to transfer money is something anyone could have predicted, especially as in the past, interest rates were high and it was difficult getting money and loans. Tradition has changed now, but challenges still exist for new types of technologies, like those operating on a distributed ledger, which globalise transactions and ensure that they are fully transparent. Nordlund states that this could change the entire industry, “could change, not necessarily will.”
Nordlund predicted that as the industry moves forward, it is also moving towards a grey area of regulation, which immediately increases the risk as control is not present. On the other hand, this can lead to ensuring that risks are made more visible and again, we return to the importance of transparency. “This could affect financial literacy, which will become a big topic in the next five to ten years when we reach a society where payments become invisible.”
According to Mobey Forum’s Game of Phones report, the new PSD2 standard will open banks up to third party access to accounts and payments initiation and questioned whether or not this will increase the number of new non-bank players that are offering mobile payments products. Alongside this, a new Data Protection legislation is expected to be put in place next year which could affect how banks in the continent handle transactions over the cloud.
“New Data Protection legislation set to come into force in Europe in 2017 may affect European banks that choose to issue wallets with a cloud component, if that involves moving customer data outside of Europe. This is of particular relevance to offerings that are supported by non-European data centres. The striking down of Safe Harbour may expedite that issue and will certainly increase the level of compliance administration required,” the report read.
The report also detailed how the recommendations on mobile payments security by the European Central Bank are still not finalised, but when this does happen, careful review and consideration should be taken so that all banks that issue mobile payments services are compliant. Despite all of this, Nordlund emphasised that cash will always be present. “Working towards a cashless society is a clear target and objective, as Finland, Denmark, Sweden and Norway are leading the way with most transactions being made by card.
“Whereas in Germany, only 30% of payments are made by card and the rest is in cash, so there are even big differences between European countries. Individual consumers do not understand how costly cash is and can be and it would affect companies immediately if cash disappeared, as mobile payments are more affordable and more traceable for the consumer and the government.” As well as this, Nordlund believes that there is a lot of hype around blockchain as many say that using this form of technology is an easy way of reducing cost.
Like with any form of technology, humans will remain humans and using a decentralised ledger would not eradicate fraud, as Nordlund said, there is no control.