Paying with a text message in 2014 - how will it work?
Published 16 January 2013 by Helen Gradwell
Making payments with your mobile is set to be 'as easy as texting' after the launch of a mobile payment service in 2014 - which will be available to 90% of UK current account holders.
In spring 2014, the Payments Council is set to launch a new mobile payments service.
The service will allow money to be sent directly to or from an account without needing the account number or sort code. Basically, you'll be able to 'text' your money over to a friend - or whoever needs it.
Eight financial institutions have committed to the launch already, and more may be set to join them. These institutions cover 90% of UK current accounts between them.
How will mobile payments work?
Money will be moved directly between accounts using existing payment schemes like the Faster Payments service and the LINK network. All you'll need to do is enter the mobile number of the person you want to pay - and if someone wants to pay you, all they'll need is your mobile number.
The details will vary depending on your bank, but the idea is to make payments fast and easy.
The chief executive of the Payments Council, Adrian Kamellard, said: "This new service will offer a simple, secure way to split a bill for dinner, receive money from a friend or pay a tradesman without needing to remember or share account details."
When can I sign up?
In recent research by the Payments Council, a third of smartphone users said that they'd definitely sign up to the service - or they'd be extremely likely to.
If you're interested in signing up, this is what's likely to happen:
You'll be invited to register shortly before the launch (if you're a customer of a participating financial institution). You can register using your online banking service, mobile app or any other method approved by your bank. Once you provide your mobile number, you'll be asked which account you want to link it to - and then you should be good to go.
Precise details for your account provider will be announced closer to the launch.
Will mobile payments be secure?
Security is obviously a massive concern for banks and customers alike.
The Payments Council has said that the service will need a security feature (such as a password) in order to authorise payments. If your bank suspects that your account is being misused, they have the ability to disable it until they've figured out what's going on.
It's likely that different banks will implement their own unique security features.
Can I make mobile payments now?
Some banks already offer a mobile payments service - if you're not sure whether yours does, it may help to ask. It's likely that more banks will start introducing this service in the near future, even before 2014.
Many banks already allow you to make a payment through their SMS banking service - although you'll need to know the account number and sort code of the person you're paying.
People with certain smartphones can pay for goods and services using Near Field Communication (NFC). All their bank details are stored in their phone, and when they 'swipe' it over an NFC reader, their details will be transferred. This makes paying in shops much quicker.
When NFC and mobile payments are combined, it's possible to see a world where the majority of people will use their mobiles for almost all aspects of their financial life.