Bank customers seeking to switch money to other people’s accounts should soon be able to do so using only the recipient’s mobile phone number as the industry shifts towards a system that would simplify transfers radically.
The Payments Council – which is tasked with speeding up UK payments – is pursuing plans that would make it easier and faster for individuals and businesses to transfer money using their mobile phones.
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After months of discussions with the industry it is expected to announce in February detailed plans for a database that would link bank customers’ mobile phone numbers to their accounts. That would allow people to transfer money to their contacts’ mobile numbers – via text message or an “app” on their handset – rather than needing to know their full account details.
The council will provide details about how expensive the system would be to set up and how long it would take to implement. It has previously suggested that such a service could be introduced within about two years.
The initiative takes place as banks scramble to catch up with online heavyweights such as Google and Paypal, which have started to launch their own mobile payment services.
To date these have centred on enabling people to pay for goods more quickly by using a mobile handset equipped with a chip that communicates wirelessly with retailers’ tills.
Analysts say banks have been slow to invest in the area of mobile payments and broader digital banking services, largely because they have had been so focused on cleaning up their balance sheets after the financial crisis.
However research suggests they may be missing out on a lucrative revenue-stream as bank customers would be willing to pay for certain digital services.
A report today by PwC finds that most consumers would be willing to pay up to £10 a month for services such as information alerts, social media notifications and a kind of “electronic wallet” that stored loyalty card points from retailers.
To charge for such services could provide the first step for banks to shift away from the controversial model of “free” banking.
Banks want to end this opaque format, whereby they extract revenue by penalty fees rather than upfront monthly charges. But customers are generally resistant to paying for basic banking.
Virgin Money, which recently acquired Northern Rock, raised eyebrows when it said it would charge for most of its current accounts when it launches them next year.
However, Matt Hobbs, retail and commercial banking partner at PwC, said there was a growing propensity among consumers to pay for additional services that would help them to manage their financial affairs.
“The mindset needs to change,” he said. “Banks need to focus on innovation and customer service rather than [on] products and sales.”
Source: www.ft.com
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