Sunday, 16 March 2014

I've moved!

I've now moved my blog from Blogger over to a self hosted site at Sevendotzero. Blogger was a good place to start out writing online but I've been feeling increasingly constrained by Blogger's inflexibility. 

Plus I always have this nagging doubt that Google will send Blogger to that graveyard in the cloud where it will join its compatriots; Reader, Talk, Buzz, Wave, Notebook, Labs, Jaiku and many others.

I've moved all my historical content and the URL is still the same at Thank you for all your support and I'm looking forward to continuing to share my thoughts with you over the coming years.

Monday, 24 February 2014

Mobile payments - where are we?

Originally published on Billing Views.

With Mobile World Congress in Barcelona upon us it seems opportune to review the state of play in mobile payments.

Mobile payments is one of those subjects that people have been talking about for ages, however the experience for most consumers is limited to shopping via apps or mobile websites, which is little different to using your laptop, apart from the smaller screen! Where mobile payments starts to get interesting is when your mobile device becomes an enabler to a simpler, frictionless payment experience. That could be sending money to a friend with Barclays Pingit or paying the dishwasher repairman with an iZettle MPOS device. Both experiences remove the need for cheques or for cash. Or that simpler, frictionless payment experience could be something we haven’t yet seen … 

Mobile handset based NFC has been the ‘next thing’ in mobile payments for a while now but has yet to gain traction despite the efforts of the mobile operators with numerous trials and proofs of concept. Handset NFC payments look doomed in my view for two main reasons - using a card for contactless payments is simpler; and without Apple’s support a major chunk of the handset market is out of reach. Apple’s position is still unclear but it now has so many payment components in place that a move into mobile payments can only be a matter of time - iTunes Store credit and debit cards, iCloud Keychain, TouchID, Passbook, iBeacon technology. Whether Apple will make a play in the payments space on its own or in partnership remains to be seen but when they do, it will be disruptive and it will change the market.

Another player who is aiming to disrupt the UK payments market with mobile handset payments is Zapp. Based on the existing banking payments infrastructure and using the bank’s own mobile apps, Zapp is aiming to offer a payment service for both online and customer present payments that operates outside the card scheme payment rails and delivers a secure (because no private consumer payment details are shared with the merchant) and cheaper (for the merchant) payment service. So far, five UK banks have signed up and I expect to see more following. With the backing of major banks and merchant acquirers Zapp stands a good chance of grabbing a piece of the UK payments market.

Digital wallets have been much talked about over the past couple of years and the concept has been stretched to cover a myriad of payment models, however for me a digital wallet provides a stored value account. In their mobile device based incarnations apps like PayPal and Starbucks have enhanced the payment experience but new players like O2 have failed because they didn’t offer the consumer something better.

MPOS schemes that enable card payments via Chip and PIN (like iZettle) or magnetic stripe swipe (like Square) are extending the ability to take card payments to anyone who takes payment face-to-face. With their much lower cost of merchant acquisition these providers have the scope to extend card payment acceptance into markets that historically could never justify the costs.

For me, the most exciting new trend in this space is around managing your entire banking relationship via your mobile phone. No more bank branches, no more phone calls - everything is available via your bank’s app. Moven in New York is pioneering this approach and it will have profound implications for the banks that have built their business on expensive branches.

Consumers don’t use payment products because they 'like paying' but because they provide access to goods or services. The key factor in determining the success of a new mobile payment product is whether it offers a better consumer payments experience than the method it intends to replace.  

Friday, 31 January 2014

Personalising your cards

Originally published on Billing Views.

Payments guru Dave Birch recently commented on his frustrations at receiving new credit cards that still have magnetic stripes, embossed numbers and names on them - all throwbacks to old technology. These features are still present to keep compatibility with non Chip and PIN use (e.g. USA) and manual ‘zip zap’ transactions. As Dave correctly points out, it was thanks to these features his last card was compromised and its thanks to these his next will be compromised!

Whilst the banks seem to be concerned about handing out cards to customers that aren’t compatible with every point of sale on Earth, they don’t seem to be taking the same care to make it harder for cards to be compromised. If the banks are not willing to remove these features from all cards (features that are redundant for the majority of customers) then they could at least allow customers to make the choice themselves. 

I should be able to log on to my bank’s website, select my card and choose the features it supports:

  • So if I don’t want to use it outside the UK, I can have a card without a mag stripe and accept that if Chip and PIN fails for some reason I won’t be able to use the card but the card is much safer. 
  • If I have a card I don’t want to use online I can request that all 'card not present' transactions are declined (and it doesn’t have a CV2 number).
  • I only want my debit card card to work in ATMs and be declined if it’s used in a shop.

Maybe the ability to have certain types of transactions declined could be switched on and off at the customer’s convenience?

As well as being anti fraud this is all about product personalisation - being able to build the product that suits me. It’s time that the banks embraced this concept across a whole range of products. 

Consumer choice in banking

Originally published on Billing Views.

Last week the news was full of comments from a certain politician about UK banks being forced to reduce their market share by selling branches. However this idea sadly misses the point about how best to increase competition in the banking market.

If the banks are forced to dispose of branches they will likely want to lose their least profitable branches, thereby creating a pool of poor quality branches that no one will want to buy and that would not be sustainable on their own. If government intervention chooses the branches they will dispose of then that means the banks have lost all control over their business. To quote Dave Birch, politicians tend to think along the lines of ‘we must do something, this is something, therefore we must do it’.

Branch disposals force customers to become customers of a different bank whether they want to or not. In my case, despite the well publicised systems problems at NatWest (which to be fair have never affected me) I quite like the bank and the products I use (as far as they go). I would not be impressed if government diktat told me I was now a customer of a new bank. 

Forcing customers into new banks misses the point of creating competition and giving customers choice. What we need are new banks with new banking models. Take Moven in the US; Brett King has created a new, mobile centric banking model that is predicated on banking products that put the customer in control through empowering them with information that allows them to make informed decisions. That is creating competition; not hiving off a bundle of branches that offer me-too products to customers who don’t want them.

Banks should of course be allowed to close branches without government interference - it’s great news for them as it reduces their cost base.

What we need in the UK is a white label banking model that allows innovators and brands to create banking products without the problems of getting banking licences and the ongoing regulatory overheads. Licensing and regulation are the responsibility of the bank providing the innovators and brands with their products. One lonely example here in the UK is M&S Bank which combines the Marks & Spencer brand with HSBC provided banking; although that example is unfortunately still predicated on an in-store branch centric model. However, are banks ready to move to a white label model? The mobile operators did it with MVNOs so maybe the banks will.

Recent research from YouGov suggests that consumers want new engagement channels like online and mobile, not branches. The last attempt at creating online only banks in the UK failed, with providers like Cahoot, IF, Egg and Lloyds (scrapped before launch) failing to make much impact; however that was before fixed and mobile broadband became ubiquitous and consumers started to transact from mobile devices. This time around adoption would look very different. Mobile devices are everywhere and if consumers feel empowered by their apps they will use them. Technology will determine the future of the banks - it’s up to the banks to embrace it and the politicians to let them.

Thursday, 23 January 2014

Will consumers Zapp?

Originally published on Billing Views.

This week Zapp announced the confirmed support from five UK banks and building societies  - HSBC, First Direct, Metro Bank, Santander, Nationwide. I've been following Zapp for a while now and this support from leading UK banks takes it beyond the concept stage and starts to make it a reality.

Zapp will allow consumers to pay in store or online, using their mobile phone and without the need for cash or cards. What makes it unique is that it operates outside the card schemes’ payment rails and it has the backing of major financial institutions who already have customers using their mobile apps. Because Zapp is part of VocaLink, the organisation that manages inter bank payments in the UK, it always looked likely to be   a mobile POS scheme that would get some market traction.

However the big question is will significant numbers of consumers start using Zapp? Will they make the jump from using cards to using phones? Whether you pay with Zapp or with a debit card, the funds come out of the same account. Debit card transactions are typically free to the consumer and Zapp transactions will presumably also be free. The banks will likely try to incentivise stores and online merchants to promote Zapp by making it a cheaper form of payment to accept (no card scheme interchange fee to be paid), however no one should ever underestimate consumer inertia.

The key factor to making it a success will be the consumer experience - any friction and a card will feel like a simpler option. One advantage phone based payments have over cards is the ability to provide a consumer with information at the point of purchase; that can be transaction based information, e.g. this month you’ve spent £50 so far in Caffe Nero, or promotional, e.g. there’s a half price croissant in-store today if you buy a coffee. However because Zapp will be integrated into the banks’ own mobile apps, rather than being a separate app, it will be up to individual banks to consolidate and provide that sort of information and do they have the systems to do it? Being part of a banking app will help adoption from customers (like me!) who make extensive use of banking apps but alone it won’t be enough. Zapp claims the payment process is more secure than existing methods because customer credentials are tokenised and not shared with the retailer in the way a card number is. Whether this will resonate with consumers remains to be seen - I suspect ease of use is what will make or break Zapp as far as consumers are concerned.

And of course, what about RBS NatWest, Barclays, Lloyds and TSB? Will they jump on board? 

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