It’s 5:30 p.m. and you’ve just walked in the door after a long, frustrating drive home from work. Just as you sink into your Lazy Boy, turn on the TV, and give a sigh of relief, your smartphone starts playing “A little Help From My Friends.” It’s your son calling from college. He’s in the campus bookstore and needs $200 for that book he forgot to get. He has to have it in fifteen minutes because the bookstore is closing and he has to read it tonight.
What used to have the potential to become a tense, “Why didn’t you call me sooner so I could get to the bank?”, situation, is no longer a quandary these days. That is, if you have one of the new apps for your cell phone that allows you to put the money into his account in seconds, all with the entry of a few numbers into your phone. Welcome to the latest addition to the mind-boggling technological world we live in: Mobile payment, a person-to-person money transfer system.
The idea actually took hold over ten years ago when PayPal became the main method that E-Bay used to facilitate quick and easy cash transactions. PayPal allowed money for an item purchased on E-Bay to be moved from one e-mail coded account to another in the PayPal database, using cash already in the buyer’s account, a certified bank account from which the funds were instantly drawn, or a credit card attached to the account. After awhile, people began using PayPal as a quick and easy way to transfer money to friends or family members, especially those overseas. The transactions were simple because PayPal allowed a no-fee transfer of funds from the recipient’s PayPal account to their bank account, thus making the transferred money available quickly, easily, and cheaply. The fee for the transfer was much less that wiring the money, so it became a popular way to send funds.
Mobile payment is in part, a descendant of this technology. In 2006, PayPal introduced PayPal Mobile, the first mobile phone app for transferring funds. Initially, few U.S. customers embraced it partly because of fears about the security of mobile transactions. Then, a few years later, when other companies began eyeing the U.S. mobile market and smart phone applications became more pervasive, PayPal tried again. They entered into an alliance with S1 Corp., a developer of banking software, to market MercMobile P2P Payments service, which launched in the first quarter of 2010.
Hot on PayPal’s heels was Obopay, a 5-year-old California company backed in part by Nokia, the giant mobile phone maker. Obopay pioneered mobile money transfers in India, Africa and other countries where the telephone and Web infrastructure is poor and fewer people have access to conventional bank accounts.
The latest challenger is a UK based company, Paym, that lets you pay for things using only a phone number. Paym, which is pronounced as ‘pay em’, has been described as the first industry-wide collaboration in the UK, an alliance that could soon potentially link every bank account in Europe with a mobile number. Although it is anticipated that many people will use Paym to make small payments to friends and family, they will still be able to transfer at least £250 a day under the scheme if they want.
Paym users simply register their mobile number and the current account into which they would like to receive payments. Their friends can then pay money directly into that account using just a phone number – without a sort code or account number. At launch, which is scheduled for mid-June, customers of the Bank of Scotland, Barclays, Cumberland Building Society, Halifax, HSBC, Lloyds Bank, Santander, TSB and Danske Bank will be able to use the service.
By the end of last week, after the announcement that the service was available, more than 300,000 people had already registered.
Innovative Smartphone Technology Opens New Vistas in Cash Transfer – ©2014 Money Movers, Inc.