January 18, 2013 - Rachel Miller
The Payments Council has announced plans for a new mobile payments service that will making paying a friend or business as easy as sending a text.
With the backing of eight major banks representing 90% of all UK current accounts, the new system is set to launch in Spring 2014. The eight financial institutions involved are HSBC Bank, Barclays, Cumberland Building Society, Danske Bank, Lloyds Banking Group, Metro Bank, Royal Bank of Scotland and Santander UK.
The new service will allow secure payments to be made directly to or from an account without the need to disclose the sort code and account number, by using a mobile phone number as a proxy.
While there are existing ways to pay using a mobile, this project will be the first service with the potential to link up every bank account in the country with a mobile number.
The new mobile payments service will move money directly between accounts using two well-established payment schemes: the Faster Payments service and the LINK network.
Adrian Kamellard, chief executive of the Payments Council, said: "This new service will offer a simple, secure way to split a bill for dinner, receive money from a friend or pay a tradesman without needing to remember or share account details."
Shortly before launch, participating financial institutions will invite customers to register via their online banking service, mobile app or other approved method to provide their mobile phone number and confirm which account they want to link it to.
One in three smartphone users have said they are either definitely or extremely likely to sign up to the new service at launch, according to a survey of over 5,000 consumers conducted by the Payments Council.
The research has highlighted the importance of security. The Payments Council service will ensure that, as a minimum, a passcode or similar security feature will be required to authorise payments. The service will also offer the technical capacity for financial institutions to remotely disable an account in case of suspected misuse.
The UK is actually lagging behind in this technology – in Africa, millions of people already use a mobile payments service called M-Pesa.