Paym – The mobile payment service set to rule the world

Paym – The mobile payment service set to rule the world

By Andy Gent

29th April saw the release of a new mobile payment system, Paym, which allows users to send and receive money using just a mobile phone number.  There is no need to remember account details or card numbers and to receive a payment you don’t even need a smartphone.  You do, however, need a smartphone with the Paym app to send money and this app links up to your current mobile banking app.  The service already has around half a million users.  The Bank of Scotland, Barclays, Cumberland Building Society, Danske, Halifax, HSBC, Lloyds, Santander and TSB have all signed up to use the service and customers of these banks can now register to use Paym.  Clydesdale, First Direct, Nationwide, NatWest, RBS, Ulster and Yorkshire are also planning on joining the cohort over the next few years.

The immediate popularity of Paym comes as no surprise.  The standard limit for a Paym transaction will be £250, although individual banks will be able to increase this for individuals or their entire customer base.  Automated payments are now the most popular method of payment in the UK.  56% are made by debit card, which represents £19.90 of every £100 spent in the UK.  Cash on the other hand represents just 17% of transactions.  These statistics are set to increase with the innovation of Paym and the encouragement the industry gives automated financial transactions.

The cost of automated payments is far less than the cost of processing cash.  The cost for UK businesses to process cash is estimated at £17.8 billion per year, which for individual small and medium sized businesses means a cost of more than £3,600 per year.  Of course there is a cost to automated payments.  When a customer pays by debit card the cost to the business is 8p per transaction, whilst credit card companies will charge a fee of 0.8% per transaction.  The benefits, however, include the reduced risk of fraud and receipt of fake bank notes.

Soon retailers will be using Zapp, a new payment system that will allow customers to pay for goods and services in shops directly from their mobile phone.  Ultimately, whether or not Zapp and Paym truly take off will depend, as it has for many other mobile payment systems, on a number of factors, particularly how convenient it really is for consumers.  But surely the true mark of success is security rather than convenience?  Since the Paym app will link to customers’ pre-installed mobile banking app, in theory Paym should be no less secure than the banking app itself.  Like every automated payment method however, the data is least secure when it is travelling during the transaction, rather than when it is stored on individual devices.

It is too soon to establish whether Paym will be the fast, secure and convenient method of mobile payment so many people hope it will be.  Over time, consumer usage will test the security and if it fails, like many other systems before, it will not stand the test of time.