The increased uptake of smartphones has led to an exponential rise in the use of mobile internet services. Current research suggests that over 50% of UK consumers own a smartphone and that this will rise to over 80% by 2016, according to Deloitte’s ‘Digital WRC 2012 The Dawn of Mobile Influence’ report. Similarly impressive mobile uptake figures are evident throughout the world.
Consumers have come to expect an ‘anytime, anywhere’ approach with regards to their personal banking needs and the ability to make and receive payments on the go is now expected. Innovation in mobile payments (m-payments) and banking (m-banking) has enabled banks, payment service providers (PSPs) and consumer-focused corporations themselves to better meet such consumer expectations. The expectation of ‘anytime, anywhere’ capabilities has also began to leak into the supply chain and businesses’ themselves.
m-banking services, akin to those offered in the consumer space, are increasingly being extended to corporate treasurers, who can now gain the ease-of-use and immediacy benefits found in the consumer market. Treasurers can carry out a host of banking activities using mobile devices, such as tablets or smartphones, including but not limited to payment initiation/authorisation, viewing balances, notifications, messaging, and so forth. Consequently m-banking is contributing towards greater efficiency in cash management processes and a real reduction in turnaround times.
On-going advances in mobile payment technology provide corporates with the opportunity to revolutionise the way they interact with their customers. Corporates that recognise the role consumers play in driving payment solutions will be able to benefit from reduced costs, improved efficiencies and competitor differentiation, speeding up their supply chain and cash management processes by rolling out the mobile channel to their end users, partners and internal staff.
Treasurers increasingly recognise the need to keep abreast of new payment channels and technologies that are increasingly being used by their customers. It’s not just about emerging channels and payment types, but also how consumers want to use these channels – consumers want infrastructure that supports them, that is readily available and gives them control over when, where and how they use it. Retailers are particularly aware of this new environment and how it can be utilised to the benefit of themselves and their customers. In fact, over 50% of large supermarkets have adopted mobile payment services, according to the 2012 ‘YouGov Mobile Wallet’ report, bringing with it a reduction in queuing times, and a significant improvement in the retail experience.
Other sectors such as utilities, the Money Services Business (MSB) sector and non-bank online organisations are all now providing smartphone apps that give consumers greater visibility of their usage, payments, tariffs and bills. Adding m-payment methods alongside the conventional cheque, debit card and credit card options provides customers with effective and efficient solutions to meet their ‘on the go’ payment needs. This has consequences for treasurers, their financial supply chains and the technologies that are available for them to adopt later on.
Mobile payments offer a genuine alternative to cash and cheque payments, but without the costs and delays associated with processing these methods of payment, aiding cash visibility and management. M-payments enable instant payment options that don’t comprise customer trust, while at the same time support the customer expectation of ‘anytime, anywhere’ service.
Feedback from corporate clients on the emerging mobile payments space affirms two things. First, many are only too aware that some of their existing payment channels are overly cumbersome and expensive. Second, they recognise how individual consumers are benefiting from m-payments and they want to replicate similar advantages for their business.
A major attraction of many m-payment models is that companies don’t always have to make a major investment in new infrastructure or connections in order to accept them. This lack of upfront investment cost makes it an easy and fairly painless process to introduce new payment services into the market and discover whether they work as an efficient payments channel.
Corporates, banks, technology companies, industry bodies and of course consumers themselves all have a role to play in encouraging the use of m-payments technology, including contributing to public knowledge, reassuring potential users of its security and promoting its use. For example, in the UK all of the major banks are actively involved in the development of The Payments Council’s mobile payments project, which is now due to launch in April 2014, providing a common shared m-payment platform that all UK banking users can access transferring money around simply by using a mobile phone number (which is associated to a bank account for registered users). The project highlights an industry-wide belief in the UK about the growing importance of m-payments.
Banks must understand what changing consumer behaviour means for their corporates in different segments and develop technologies that facilitate these interactions in an easy, fast, simple and affordable way. Barclays’ Pingit app, for example, which will be supplemented by the UK industry’s m-payments platform, is an offering that takes these trends and seeks to make it easier for consumers to interact with each other, with corporates and, crucially, with their bank. By using Pingit, consumers can make payments to individuals and to corporates, quickly and simply without having to share any sensitive information. Some corporates and small-to-medium sized enterprises (SMEs) or sole traders are already accepting these Pingit m-payments and others can join in. The next stage under development will soon enable corporates to make disbursement payments, involving the treasury and thus truly creating a two way m-payment system.
The next stage in the development of mobile payments is not far off and it will prove to be an exciting one. The launch of 4G Long Term Evolution (LTE), the rise of app-based services and the growth in near field communication (NFC) enabled devices will accelerate change and make further enhancements possible. It is anticipated that the journey will continue at pace. In fact, it could already be argued that change is already happening at such a fast pace that developments will quickly become history, as they are superseded by new and even more advanced applications. The mobile channel is definitely a space to watch.
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