The payments industry has undergone a rapid evolution in recent years, with traditional payment methods being joined by more modern transaction platforms. Online transactions and mobile payments both recently entered the market and in many cases usurped former favourites.
In the coming 12 months, the landscape is set to change once again, with more and more mobile payment options becoming available for consumers, retailers and banks all over the world. This is thanks to the launch of wide-ranging applications and measures, such as Paym from The Payments Council and Zapp's deal with major retailers and banking institutions.
The simple fact that mobile payments are more convenient, quicker and can replace paper money makes them appealing to businesses of all natures in a host of different sectors and industries.
The basic methods used for mobile payments are Premium SMS, Direct Mobile Billing, WAP and near-field communications (NFC). All of these have been operating within the mobile payment sphere for a number of years, but they have now been joined by a new option - contactless payments - the next big player in the payment technology industry.
A recent study conducted by Visa Europe indicated that the technology is already making a splash in Europe, with nations such as Poland, the UK and the Czech Republic embracing the new payment method.
The report found that in the UK alone, 94.3 million contactless transactions were carried out by consumers through the payment method, a rapid increase from the 25 million made in 2012. According to Visa Europe, the figures indicate that UK consumers are embracing the ease and speed of making contactless payments.
Juniper believes that by 2014, 17 per cent of all mobile subscribers will have an NFC-enabled phones, with usage ramping up dramatically in the next four years with a forecast of 430 million by 2014.
Simplifying the mobile payments system
Traditionally, there has been something of a breakdown in communication between the mobile payments industry and the financial services sector, with executives and experts in the financial sector concerned about the potential dangers offering mobile payments may pose to their businesses from a security point of view.
This frosty relationship is thawing, thanks to a range of new applications and payment technologies, such as the Barclays Pingit mobile application, which has proved popular and indicated that it is possible for the finance industry and mobile payments to join forces for the ease of consumers and businesses alike.
This triumph and the ongoing simplification of the interface between the mobile and financial services industry is crucial to the success of mobile payments in the coming years. In the past, there were too many niche technologies and very little attempt made to roll out the technology across the board. However, the mobile ecosystem has evolved in the past decade and now it is possible to achieve a large-scale roll out.
Large-scale mobile payment projects
There are a host of large-scale mobile payment projects in the offing at the moment, with Zapp and The Payment Council each ready to launch new mobile payment and banking technologies. The Payment Council has announced that the final stage of testing for its Paym technology is on track and that a launch date will be revealed next month. A host of financial institutions - such as Bank of Scotland, Danske Bank, Halifax, HSBC, TSB Bank, Santander, Cumberland Building Society and Lloyds Bank - have all signed up to roll out the payment technology when it is ready to go live.
Adrian Kamellard, chief executive of the Payments Council, highlighted the technology as a great example of industry-wide collaboration, which is something that is being seen more regularly at the moment within the mobile payment and m-commerce world.
Zapp has also recently announced that it is confident of securing deals with a number of high-street banks, enabling them to offer its mobile payment technology. The system allows customers to pay for goods directly from their bank accounts using their mobile phone and HSBC, Santander, Nationwide and Metro Bank are already on board.
However, Peter Keenan, the firm's chief executive, said that Zapp is in advanced discussions with a number of other banking institutions that will see the ability to pay for goods and services via a mobile phone offered to more individuals and businesses.
MasterCard has also announced a partnership with Syniverse recently, which it claims will help to bring mobile financial services to every single mobile user on the planet. The pair are currently piloting a fraud prevention service that will link a bank or credit card to a mobile phone, so payments can only be made when both elements are present.
In the future, the companies aim to market the collaboration as an opportunity for mobile operators and brands to improve their services and target offers based on the location of a mobile device, which can then be paid for using a mobile device.
By Tony Aynsley