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Wednesday, 10 September 2014

Tech Update

Are You Ready to Ditch Your Plastic Yet?

It's the Future!
Plastic cards have been apart of our lives for so long now that we trust them and use them every day without much thought. The credit card has been around since the early years of the 20th Century. It’s not just credit and debit cards: these days most of us also routinely use store cards, loyalty cards, Oyster Cards and pre-loadable cash cards for foreign travel. We expect every transaction to happen quickly and smoothly; we expect to be rewarded every time we use them with Air Miles or Loyalty Points; and we expect our personal account data to be kept safe and secure from would-be fraudsters and hackers. That’s a lot of expectation, innovation and technology; all contained in the space of an 85.60 × 53.98 mm plastic card.

But do we even need that small bit of plastic any more? After all, we have our trusty phones now. Even the Luddites and doubters, who, like me, fifteen years ago, swore they would NEVER bother with such a new-fangled, unnecessary, time-wasting and expensive contrivance, have now succumbed. I must admit that, as a grumpy older person, it still annoys me to hear people on the train, in cafes and bars or on the street, bellowing their personal business into their phones for all to hear.  

Why are some people incapable of buying so much as a tin of baked beans without checking over the phone first with the wife?  I have even heard people discussing their impending court cases with their lawyers, maybe nothing to be ashamed of, but usually nothing to be proud of either, on the bus! Why can’t they spend five minutes quietly on their own without phoning or texting? As far as I am concerned, bus and train journeys used to be blessed interludes of peace and quiet and inactivity, a time for staring into the middle-distance, day-dreaming, thinking, or just for a bit of rest and relaxation. Sometimes people even used to have a nice conversation with the person actually sitting next to them. Now these short journeys are just another opportunity for using the phone and conducting business: what a shame!

OK that’s got that personal gripe off my chest, but I suppose now we have mobile phones and smart phones, we may as well use them to the full extent. If you are going to carry your beloved phone with you everywhere, 24/7, and you already use it for social networking and as a camera, why not use it as a handy payment method too? In some parts of the world many thousands of people have enthusiastically embraced the concept of the mobile wallet, plunging straight into digital banking without ever having used a plastic credit or debit card.

In Kenya, for example, millions of people have embraced the mobile wallet technology offered by a Vodafone service called M-Pesa. That’s M for Mobile, and ‘pesa’ is Swahili for money.  In such a vast country with limited access to a transportation network, I imagine that the ability to transfer money to friends and family hundreds of miles away must be a godsend.  Mobile wallet services have also been available in Japan for a number of years now.   Osaifu-Keitai, literally "Wallet Mobile", is actually a trademark of a company called NTT DoCoMo, which developed the system. Osaifu-Keitai services include electronic money, identity cards, loyalty cards, and payment of public transport fares.

For those of you still reluctant to use your phone for banking purposes, I bet the main reason is concern about security.  There are plenty of stories in the news about the security problems with mobile phones. The practice of hacking into celebrity mobile accounts by unscrupulous journalists has been a huge story in the UK, and famously brought about the demise of long-running newspaper the News of the World.  If criminals can do that, you would think that fraudsters can get into our mobile wallets too, right? In fact digital banking and mobile wallets may actually be more secure than a traditional credit card, as they are protected by Chip & PIN security technology, unlike most American credit cards which still reply on the stripe and swipe system.

Simfonie, provided by the New Zealand based payment systems provider GFG Group, is a good example of a state-of the-art mobile banking service.  It now has 135 million subscribers who can use their phones for a complete range of mobile banking services including paying bills and person-to-person transactions, with all the in-built security features you would expect from any reputable bank. Old habits die hard though, and I suspect that most of us will require  some time to get used to the new card-free system, possibly by starting off with using it initially solely for low-value transactions, for example. It is still early days for the mobile wallet and there are some technical issues and limitations to be sorted out with near field technology, I-beacons and blue-tooth, but nevertheless it is definitely coming.

Biometrics: the Next Big Thing
After we have all chucked out our plastic card collection in favour of using our smart phones to pay, the next step in the payment technology revolution will probably be biometrics. Biometrics uses natural, unique human characteristics for identification purposes.   This technology has been around for a long time (think of fingerprinting for crime-solving, iris-recognition at border controls), but is still something new in the digital banking world. One example is Quixter, a palm touch system invented by a high-tech start-up company in Sweden. The Quixter system uses vein-scanning technology to identify an individual  based on the unique vein-pattern in their palm, deducting payment from their previously linked bank account.

So thanks to biometrics, not only can we ditch our walletful of plastic cards, we can chuck out all those pesky mobile phones too!  The downside of this state-of-the-art technology is that in the future, instead of stealing our wallets, plastic cards or phones, thieves and fraudsters will be forced to chop off our hands and use them to get at our money. Something to look forward to...

Foot note
 In 2015, the US will adopt Chip and Pin and Europay, MasterCard and Visa (EMV) smart cards as the standard payment protocol. This means all shops will be forced to invest in new hardware, and the new equipment will come ready-equipped with NFC (Near Field Communications) capability as standard. That will be a huge factor in speeding up the take-up and acceptance of the mobile wallet.

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