Visa Personal Payments users can now make mobile payments across the region immediately.

Payment processing firm Visa Europe has introduced a service allowing consumers to make mobile payments across the region immediately and using any European currency. Meanwhile in India, popular money transfer and payment service M-Pesa has now been fully launched.

Visa Europe’s Personal Payments service enables Visa credit, debit or prepaid card users to accept payments from another Visa cardholder without needing to share any account details. Customers need to register for the service and know either the mobile phone number or Visa card number of the person they are sending a payment to. They can then make payments using a smartphone app offered by the sender’s bank.

Visa Europe announced the launch of its Mobile Person-to-Person payments back in September 2011, but it wasn’t until last month that RBS and NatWest became the first banks to launch the service via their mobile banking apps.

The payment provider said its personal payments system now has 17 “live and committed issuers” across Europe, with the announcement that it has made changes in the payment clearing and settlement processes. The changes have seen fund transfer time reduced from one to two days to immediately, and Visa Europe expects more firms to begin supporting the service as a result.

The multi-currency feature, which will be available by the end of 2013, also simplifies international money transfers to mobile devices.

Meanwhile, M-Pesa has now been fully launched in India by Vodafone India and local bank ICICI, following a pilot which began in November 2012. By launching the service in India, Vodafone hopes to help approximately 700 million Indian citizens who previously had no access to conventional banking.

The service, which was first launched by Vodafone in Kenya in 2007, allows customers to send and receive small sums of money via their phones as securely and simply as sending a text message.

The service will now be launched in eastern areas of India by more than 8,300 specially trained and authorised M-Pesa agents. The service will be rolled out across the rest of India in a phased approach, said Vodafone.

Turkcell and Gemalto have each found themselves at the hearts of two mobile payment projects in Turkey and the USA respectively

Turkish operator Turkcell and SIM card and mobile security solutions provider Gemalto have each found themselves at the hearts of two mobile payment projects that promise to transform the transport and retail sectors in Turkey and the USA respectively.

Turkey’s Turkcell has integrated the country’s public transport card Urfakart into its mobile wallet solution.  As a result, customers using Turkcell Wallet are able to make contactless payments for transport services in the Sanliurfa province using their mobile phones. In addition, they can check and top up their Urfakart balances without having to go to a payment point.

The operator has been somewhat of a pioneer in the mobile payments space. It launched its wallet solution in October last year, which works on both smartphones and feature phones, and supports contactless payments on NFC-enabled phones. It has also struck deals with the Turkish Football Federation (TFF) to sell match tickets to fans via their mobiles across the country, and with local bank Akbank to introduce an NFC-based mobile wallet service incorporating location-based elements.

“We, as Turkcell, are leading the way in terms of mobile communication technologies that are not only reshaping the world but also changing the way of doing business in sectors such as transportation, finance, education and health,” said Turkcell general manager Sureyya Ciliv.

“Turkcell Wallet, which we introduced in October of 2012 as the world’s most advanced mobile wallet solution, is currently on the mobile phones of 1.2 million people. The Turkcell Wallet public transportation system is a first in Turkey and we hope that the 207 public transportation vehicles in Sanliurfa will set an example for other provinces to follow in the near future.”

Over in the US, the Merchant Customer Exchange – a body representing a group of retailers with the aim of setting up a standardised mobile commerce platform across the sector – has selected Gemalto to build its mobile wallet.

The MCX cited Gemalto’s expertise in mobile financial services and its track record of working with banks, governments, merchants and mobile operators as its reasons for selecting the firm.

The MCX wallet will be primarily barcode and cloud-based, the body said, and will run on Gemalto’s Allynis Mobile Payment platform.

Once deployed, the wallet will be accepted at all MCX members, a group of 35 retail firms including the likes of Walmart, Target, Sears, Gap and Shell. The merchants collectively operate more than 75,000 stores and process more than $1tn in payments annually, according to the MCX.

“Our work with [Gemalto] over the past months leaves little doubt that MCX will benefit from their considerable technical expertise,” said MCX senior executive Dodd Roberts.

“The calibre and scale of the merchant organizations behind MCX creates opportunity to elevate mobile payments,” Jack Jania, SVP at Gemalto added.

Financial sector commentator and author Brett King

Disruptive digital technologies such as mobile communications and the internet will destroy established retail banking business models, according to financial sector commentator and author Brett King, by removing the physical product and replacing it with a digitised bank account.

“In the old days there was a physical product, and a physical store,” said King, speaking at the Industry Payments Summit in London this week.

“Then with the arrival of the internet, you could buy the physical product, such as a book or an album, in a digital store – think Amazon.com or eBay. Consumer behaviour started to shift, and very rapidly business models that had been profitable went out of business. Banking is no different.”

According to King, the music industry and the book industry have both already been through this shift – and banking is next. Pointing to the example of peer to peer music sharing website Napster, which was targeted by litigation from the incumbent music industry players, King warned that in the long run attempting to stop changing consumer behaviour is a futile battle.

“The Recording Industry Association of America spent hundreds of millions trying to stop changing consumer behaviour and failed,” he said. “Then along came iTunes, and you didn’t need the physical product. It destroyed the value of the physical distribution layer. The same thing happened in books – store owners said people would still want to come and touch the books. Then along comes the digital kindle and destroys the physical product layer – are you seeing a pattern?”

Citing statistics on consumer behaviour, King stated that in 1995 the average EU consumer made 2.21 visits per month to the bank. By 2012, that figure had dropped to just 0.26 visits, which equates to 3.2 visits per year. Recent job cuts at major financial institutions, including 16,000 redundancies at Bank of America, 17,000at JP Morgan Chase and 40,000 at Barclays, are the early warning signs of the change to come, he added.

“By 2016, the average user of banking services will be using digital services 300 times for every physical interaction with their bank,” said King. “If you work for a bank and you think that one physical interaction a year is enough to retain the consumer, you had better think again.”

The future envisioned by King involves the replacement of physical banking products, such as a debit card issued at a bank branch, with digital ones, such as a mobile payments app downloaded onto a smartphone. This, he says, will help to remove the “friction” in banking, caused by restrictive processes, outdated ways of doing business and excessive risk mitigation. The low-cost and widespread availability of mobile handsets should also provide a stepping board to the democratisation of banking – meaning that people who couldn’t get bank services before will now be able to do so.

“Square’s greatest innovation was that it realised there were 30 million people in small businesses in the US that couldn’t get a merchant account,” he said. “In the past, the bank would ask ‘how much will you spend?’ and demand a minimum level of spend – say $50,000 – then force the customer to sign multiple contracts and pay a deposit for the point of sale device. Now all they have to do is go online and download an app.”

Brett King is the author of Banking 2.0, a widely-known book that explores the effect of new technology on consumer behaviour and banking. He is also the founder of Moven, a new mobile-only bank that focuses on the concept of a ‘digital wallet’, in which the consumer’s smartphone replaces their debit card and cash payment tools.

IPS delegates disagreed over the future of mobile payment

Senior executives from the financial sector are split over the extent to which mobile payment technology has failed to take off – and what they can do to fix it.

According to Niklas Bartelt, managing director at Germany’s DZ Bank, the jury is still out as to whether mobile payments are the next big thing.

“There are a lot of scenarios we are looking at. It could be the next debit card, but it could also be the next electronic purse (which failed),” he said at the International Payments Summit conference in London on Wednesday.

DZ Bank is currently partnering with Swedish payments company iZettle, which distributes cheap mini chip-card readers to small-scale merchants. The technology is part of a wave of products that aim to make payments easier, faster, and cheaper. Earlier this month, payments company Kalixa Group launched a set of tools including an mPOS, e-wallet and acceptance kit, which it said would disrupt the global payments market in Europe, the Americas, Asia Pacific and the Middle East.

However, while useful, Bartelt was unconvinced thatsuch schemes as iZettle and Kalixa would change the world. “Contactless technology has not borne fruit as much as some of us had hoped,” he said. “We need to watch customers and what their real problems are.”

These sentiments were echoed by David Birch, director at Consult Hyperion, who said that customers cannot currently purchase a phone that supports mobile payments in the UK – making the whole question of mobile payments irrelevant. Birch added that in a rational world, banks and mobile operators would work together to provide security – but that is not the case today.

“The world we live in has not the slightest shred of cooperation between banks and operators,” he said. “Look at Sixpack in the Netherlands, it didn’t work. That’s why NFC stickers are the future of mobile payments.”

Other participants argued that the debate on mobile payments risked misplacing where the advantage of the new technology actually lies. Instead of focusing on NFC or focusing on replacing more traditional forms of payment, advocates should focus on other ways of finding value, or else the new technology risks failure.

“There needs to be something more to a mobile wallet,” said Steve Ellis, EVP, group of wholesale services at Wells Fargo. “Do you have trouble using cash or debit cards? Nobody has a problem buying anything they want. What we need is to add value. The real promise of a mobile wallet is to create a one-to-one marketing relationship between the retailer and the consumer that is useful to both – that’s what’s valuable.”

According to Ellis, most mobile payments that take place in the US actually consist of users simply using their mobile to access a website and carry out a payment, rather than a proximity payment such as purchasing an item in a store. Echoing concerns voiced earlier by Eimear O’Connor, head of mobile payments product management at Barclays, Ellis called for the creation of new standards to make alternative payment types work effectively and to avoid unnecessary duplication.

“Do I have to go to all my different mobile wallet providers, or can someone aggregate it for me?” he said. “We need to work cooperatively and positively, not to keep people out, but to prevent painful compatibility issues coming up. Mobile payments are a great opportunity – they are much more valuable than cards in getting people away from cash.”

Following the launches of mobile card reader devices such as Square, iZettle and mPowa, US firm Inuit has launched one of its own. Intuit Pay enables businesses to take secure payments face-to-face and over the phone. The Chip & PIN card reader is currently only available for Apple’s iOS devices, and is free for a limited, unspecified, time.

The firm will take a 2.75 per cent fee for all transactions. Intuit said that the device will connect to the firm’s own accounting software, QuickBooks Online, from April 2013, to allow subscribers to accept card payments and update their accounting records in one go.

“Intuit Pay solves an important problem for the millions of small businesses and trades people in the UK who don’t currently accept card payments and so miss out on sales or prompt payment as a result,” said Terry Hicks, vice president of products for Intuit’s global business division.

“Current solutions are either too expensive, demand long-term contracts or simply don’t work where businesses need them,” he added.

Called IKO, the service is based on the Mobile Everywhere technology platform from Stockholm-based Accumulate, and Pera Mobile, the global open technology standard for mobile payment. The basic solution has been customised and functionally extended within PKO Bank Polski’s project, with assistance from HP and Accumulate.

HP was responsible for the full project at PKO, from requirement and specification, to the implementation, system integration and development of the banks back-end systems.

With the ME platform all types of mobile payments, banking and security services can be enabled using a single platform. Additional services such as mobile ticketing, loyalty, coupons and gift cards can be added

The initial IKO service supports point-of-sale payments, which will include support for NFCin the future; online payments; person-to-person transfers using a proxy phone number; cardless cash withdrawal from ATMs; account balance, transaction history and settings such as PIN number.

“The possibility of paying by a telephone creates brand-new quality regarding convenience, availability, as well as meeting of customers` expectations. The combination of banking and transactional functions in one device is a real breakthrough. We are pioneers in mass mobile payments in Poland, and this proprietary solution has realistic chances for becoming a local mobile payments standard in the European market,” said Piotr Alicki, chief information officer at PKO Bank Polski.

The IKO mobile payment service is available for PKO customers and at launch is available on Android and iOS systems. It will also be ported to BlackBerry, Symbian, Java and Windows Phone environments.

Almost 200 million mobile users will be making payments via their mobile by 2017, according to Juniper Research

Almost 200 million mobile users will be making bill payments via their mobile by 2017, according to research published today. According to Juniper Research, there is a growing user acceptance of ‘push’ mobile banking and a sharp rise in tablet adoption, which will drive users of transactional tablet banking services. However, the firm did not state their estimates regarding how many users are utilising mobile payment services today.

The report finds that, adoption of mobile bill presentment and payment (MBPP) transactional banking by tablet users will be higher than mobile handset users, especially in developed areas where there is a higher adoption of tablet devices.

There will also be significant migration of purchasing and transaction activity from laptops and desktops to tablet devices, as consumer tablet adoption continues to rise, Juniper Research stated.

“With online payments accounting for a significant proportion of all bill payments, especially in developed markets, MBPP transactions will indeed migrate from the desktop towards tablet devices. Consumers often prefer managing bill payment and transactions via tablet devices compared to smartphones”, said report author Nitin Bhas.

However, with banks bundling MBPP services within their mobile banking platform and additional momentum from easy to use smartphone apps, mobile phone transactional banking usage will quickly increase, Bhas added.

The report also forecasted that the number of mobile banking users will exceed one billion in 2017, representing 15 per cent of global mobile handset users, according to the report. The developed markets of Far East and China, North America and Western Europe will have the highest penetration of banking users in 2017, it stated.

Lambert also talks about the blurring of the boundaries between the physical and digital worlds of consumer shopping.

Wincor Nixdorf: mobile cash withdrawal will become ubiquitous

While most large banks in the UK offer a mobile app, some do not yet offer mobile cash withdrawal as a service. That is likely to change soon, according to Ian Byrne, banking director UK and Ireland at ATM maker Wincor Nixdorf.

“The technology is here today – it’s not an abstract concept,” he said. “Banks have held off investing in retail for many years, partly because ATMs have a long life, but that life is fast coming to an end. In three years’ time, there won’t be a major bank that doesn’t offer mobile cash withdrawal.”

This month, Wincor Nixdorf has developed a mobile cash app that works on both Android and Apple iOS device, so that customers can withdraw money from their ATM without a debit card. It works by sending the customer a QR code for the transaction, together with directions to the nearest ATM. Using the Wincor Nixdorf system, the customer can select the mobile cash function on the ATM and then control the rest of the transaction from their smartphone.

The service is not entirely new – NatWest has been offering cash withdrawal through its mobile app since June last year. But the firm says it is the first vendor of ATMs to integrate its service in Apple passbook using Apple passes.  The QR code is stored in Apple passbook or the mobile cash app.

According to Byrne, the technology to make cardless withdrawals is relatively simple – a connection between a phone and the computer behind the ATM. However, the majority of ATMs currently in the market lack NFC technology or the barcode scanner needed to take the payment from a mobile user with a QR code.  Once these machines have been replaced, he expects to see a dramatic surge in uptake.

“Customers are comfortable using an iPhone or iPad with their friends, and now they are increasingly happy to use them to interact with their bank,” he said. “A similar situation happened with mobile airline bookings. It was coming for years, and then suddenly within less than 12 months it was everywhere.”

Despite the enthusiasm of Wincor Nixdorf, mobile cash withdrawals have not had an easy ride. Last year, NatWest’s get cash app was hit by hackers, who used an online scam to get customer banking details which were then entered into the mobile app and used to withdraw cash without the victim’s knowledge. The app was temporarily suspended in October but is now back online.

However, Wincor Nixdorf insists that dependent on the security and authentication used at the ATM, there is no reason why a mobile cannot be just as secure as a card. Mobile devices often contain technologies such as GPS that track the user’s location, front-facing cameras that can be used for face-recognition, and other biometric tools such as voice recognition technology and in some cases fingerprint technology.

Other observers have expressed similar views about the potential for mobile security. In December, Ben Knieff, head of fraud at financial crime and technology specialist NICE Actimize told Banking Technology that mobile banking could eventually become safer than online banking.

“While consumers didn’t like biometrics 10 or even five years ago, rising usage of the technology on sites like Facebook has made it more acceptable,” he said. “Consumer sentiment is changing, and I believe there could actually be an opportunity to use some of these technologies to make mobile banking even safer than internet banking is today.”

PayPal Here is the payment provider's Chip & PIN mobile payment device

Payment provider PayPal has launched a card reader device that handles Chip & PIN and PayPal payments in Europe. The device will be available to select UK businesses over the coming months before becoming generally available this summer.

The firm launched the a magnetic strip version of the service in the US and several other countries in 2012. At the same time, it set up a team in London to create a version for Britain and other markets where Chip & PIN payments are standard.

Retailers can pair the device with their smartphone to accept secure payments wherever they trade, such as at a market stall, shop, restaurant, taxi or in a customer’s home.

“You use the app as your 21st century till: as well as taking card and PayPal payments, it allows you to send invoices and receipts wherever you do business,” explained Cameron McLean, Managing Director, PayPal UK.

He added that the product reflects the substantial amount of time PayPal has spent talking and listening to small businesses.

“They are the core of PayPal’s business and they’ve told us that they want a simple, secure way to take card payments anytime and anywhere they trade,” continued McLean.

London-based goat’s milk ice cream vendor Greedy Goat helped PayPal test and design the service. According to Mark Thomas, executive at Greedy Goat: “Cash is king in the market, but people run out of cash very quickly, and we often lose sales because customers can’t face the long weekend wait at the cash machine.”

“PayPal Here is the perfect solution for us, as it gives our customers the chance to pay by card, backed by the reassurance of the PayPal name on the machine. It means more people will enjoy our goats’ milk ice cream this year, which is great for our business.”

Eden Zoller, principal analyst at Ovum, said that the UK is the logical place to start as it is PayPal’s second biggest market outside of the US with some 18 million active users.

“PayPal has taken pains over the PayPal chip and pin device, which was designed and built in the UK and over a year in the making,” she said. “But it will come with a price tag and this will need to be competitive given the solution is meant for small businesses. PayPal says this will be the case – it is not looking to make money from the device itself.”

Zoller added that mobile credit card reader solutions appear to address a genuine need in the market – an easy and convenient way for small businesses to accept card payments without having to invest in costly credit/debit card processing equipment.

“The market for these solutions is becoming increasingly competitive and PayPal Here is not the first of its kind in Europe, where the likes of iZettle, Payleven and mPowa have already launched. But  PayPal has an advantage in being an established, trusted payment provider with a high profile global brand.”