Paym mobile payment

 Transferring money by mobile phone is set to get easier with the launch of a new mobile payments system called Paym (pronounced “Pay Em”). It allows people to pay using just their phone number, taking the hassle out of having to provide sort codes and account numbers. The service will launch on the 29th April 2014 (1).

UK IOUs and informal loans are worth £12.6bn a year according to research by IOU UK (2). The new service is aimed at making it easier for friends and family to pay each other, for such occurrences as a split restaurant bill or the purchase of event tickets, or could even be used to pay the plumber for fixing the boiler. At the moment Paym can only be used for payments between individuals, and not retailers. Users will be able to send up to £250 a day and transfers will be completed almost immediately.

How does it work?

Paym will be integrated into customers' existing mobile banking apps. Anyone with a mobile number registered to a bank account will be able to receive funds, regardless of whether they have a smartphone. However to send payments requires a phone with a mobile banking app integrating Paym.

Which banks and building societies will be participating?

Paym is an industry-wide initiative delivered by the UK Payments Council and will be operated by VocalLink, a company jointly owned by 18 UK banks.

On launch, the service will be available to customers of nine banks and building societies; Bank of Scotland, Barclays, Cumberland building society, Danske bank, Halifax, HSBC, Lloyds bank, Santander and TSB bank. Customers will need to register in order to link their mobile number with their nominated current account.

Nine out of ten UK current accounts will be able to access the service later in year, as it also becomes available to customers of Clydesdale bank, First Direct, Isle of Man bank, NatWest, RBS International trading as NatWest, the Royal Bank of Scotland, and Yorkshire bank. Others including Nationwide, Metro bank and Ulster bank plan to join in 2015.

What are the current mobile payment alternatives?

Many of the participating banks and building societies already have their own mobile banking apps, which Paym will be an integrated extension of. Pingit, the app from Barclays which launched in 2012 and was used for £350 million worth of transfers last year (4), already allows customers of any bank to send and receive payments using just a mobile phone number. Paym is the UK Payments Councils initiative to link all the different providers’ apps together.

In addition to the banks and building societies, PayPal, which is said to have 18 million accounts (4) holders in the UK, has allowed customers to send money by mobile for the last 8 years, requiring just the phone number or email of the recipient.

Interestingly, Kenya has been leading the way with the mobile wallet revolution. Since 2007, m-Pesa has been offering mobile based, branchless banking that allows those without a bank account to transfer funds as quickly and easily as sending a text message and has over 17 million customers (5).

Will the service be secure?

As with all payment services security is crucial, especially those contained on a personal handheld consumer device. As Paym will not have its own dedicated smartphone app, the security of the service will be in line with that of each of the participating bank's online and mobile banking facilities. All the participating banks and building societies have had to sign up to strict security standards which require all apps to be protected at minimum by a passcode or password.

To prevent mistakes occurring through accidently typing in the wrong number, when the user enters a number to make a payment, the service will check whether the recipient is registered and then display their account name. If the wrong name appears the request can be cancelled. Users can also contact their bank or building society to suspend service should they lose possession of their phone.

What will be the impact of Paym?

The mobile phone is becoming more and more central to everyday life and so payment by phone number as part of the mobile wallet offering is a logical step. Given this is just an extension of existing mobile banking applications, it is unlikely to lead to an immediate revolution in the number of IOU settlements, but what the service will do is add another layer of convenience amidst changing consumer habits. It should be noted that not all will be comfortable giving out their number to those they don’t know well and so the reach may be limited.

The popularity of Paym will be strongly influenced by how much the banks wish to push the service. Barclays made a big effort to promote Pingit with TV, digital and print advertising campaigns and has gained some traction. PayPal’s offering has been around for a long time but take up is questioned (4).

So if you still owe a friend for last week’s meal, it may soon become easier to pay them back, and in turn, lead to those who have left their money at home going easier on escalating the wine bill!

If after reading this you wish to register, more information on the process can be found on the Paym website.