The financial services industry is growing and accounts for more in tax revenue for the British government than any other sector. As it strives to grow even more, significant amounts of money is being invested into new payment innovations in order to help it compete with other financial markets. While some of these new innovations are widely publicised, such as near-field communication systems and contactless payments, some have been growing silently in the background for a number of years.
In 2013, faster payments accounted for more than $1 trillion in transactions, and this number is growing exponentially. Old systems like BACS, while still widely used in the UK for things like benefits and salary payments, will soon be overtaken.
This article discusses some of the latest innovations in payment technology and how they are contributing to the UK’s payment network.
Contactless Payments: Already Outdated?
Contactless debit and credit cards have been phased in over the last 10 years by major high street banks, but this method of payment has limitations. The most obvious limitation is the payment limit on which goods can be purchased. Most have a £20 limit, which makes it only useful for small transactions.
Obviously, the benefit of this form of payment is one of convenience. Pin codes and signature authorisation suffer from security issues and have been a major cause of credit fraud. Despite this small issue, as the payments are limited, the potential for fraud is also limited. So what are the alternatives?
Near Field Payments: The Future of the Smartphone App
Saturating the technology sections of the papers has been the latest innovations in near-field communication and, in particular, the use of digital wallets. Companies like Apple and Google have brought out their own NFC payment systems that are incorporated into their respective operating systems. This allows for quick payments without the need for physical payment mediums, such as cards.
Security issues inherent with NFC technology are still being addressed, and concerns have been raised by experts about issues such as tapping, eavesdropping, and data manipulation. This should cause concerns to both businesses and consumer alike because the potential for fraud is not limited to the user. Consumers have also has their smartphones hacked, from a distance, using devices that can intercept payments as they are being transferred through a wireless link. Some high street shops utilise small devices on their pay pads that prevent this from happening, but many smaller outlets are still catching up.
The Online Banking Revolution
Consumers and businesses alike could benefit from the latest innovations in online banking. Some financial companies, such as Vocalink, are working in partnership with high street banks to make online payments just one of the many services available from smartphone apps. Banks are responsible for the security of their customers and have very sophisticated technology protecting their customer’s bank accounts and details. And coupled with the security features already in place on a lot of banking applications, this is making it very difficult for fraudsters to manipulate their services. Financial technology providers are already feeling the benefits of the new faster payments services, as explained in this article.
Online banking apps offer consumers convenience and a wide range of features, essentially rendering high-street banking obsolete. Customers can now increase overdrafts, apply for loans, and manage their bank accounts from anywhere with an internet connection. Paym, a service recently announced by Vocalink and their partners on the high-street, allows consumers to make payments without ever having to send any financial information to the vendor. This, along with advancements in faster payment services, is growing in popularity as consumers become more concerned with their privacy following a string of high profile leaks of sensitive information.