Payments Council pushes mobile payments back another year

A year's delay is the price of getting ubiquity for mobile payment services

The UK Payments Council has announced that the introduction of its planned Mobile Payments Service has been pushed back until “spring 2014” – a year after its previously expected introduction, and two years after Barclays broke from the rest of the UK banks and launched its Pingit service.

The delay comes despite commitments from financial institutions that represent 90% of current accounts in the UK, with Barclays, Cumberland Building Society, Danske Bank, HSBC Bank, Lloyds Banking Group, Metro Bank, Royal Bank of Scotland and Santander lining up to pledge their support.

A spokesman for the Payments Council said that the lengthened deadline was to ensure that the service is “as ubiquitous as possible” when it does launch. “The extra time is to ensure that we have that ubiquity – although the institutions that have committed represent 90% of current accounts, we are not looking at this being limited to current accounts,” he said. “We want to attract innovative payment services providers.”

The Mobile Payments Service will be open to any Payment Services Provider that has access to the Faster Payments of Link networks. Both of these are operated by VocaLink, which was also contracted by the Payments Council to manage the proxy database of mobile numbers that is central to the operation of the service.

Testing of the database was completed in December, and VocaLink executives had previously said that they expected the service to be available in the first quarter of this year.

The new service will move money directly between accounts using the established the Faster Payments service, which processed more than 800 million online and phone banking payments in 2012; and the Link network, which processed 3.1 billion real-time ATM withdrawals last year.

Further announcements of additional non-bank PSPs committing to the service are expected in the year-long countdown to its introduction, the Payments Council spokesman said. Closer to the actual launch, those that have signed up will be canvassing customers to get them to sign up via their online banking service, mobile app or other approved method to provide their mobile number and confirm which account they want to link it to.

This will be accompanied by a Payments Council awareness campaign in the national media. Getting maximum exposure as part of this is one reason why it is unlikely that another bank might follow Barclay’s example and introduce a service ahead of time, according to one source familiar with the negotiations.

While some institutions are frustrated by the delay, they see a need for a united front, and that means “almost by definition they have to move at the pace of the slowest”, said the source. “It is a year’s delay against the originally conceived introduction, but the banks have been taking stock of what they want to be able to offer, and there have been considerable enhancements to the nature of the service.”

In particular, the need to make changes to the underlying infrastructure to be able to accommodate the PSPs means taking more time, though some PSPs are also frustrated by the delay. “European competition considerations mean that it has be not just a bankers’ club, and that in itself requires some effort at the infrastructure level,” the source said.