The new Payments Council service will enable secure payments to be made directly to or from an account without the need to disclose the sort code and account number, by simply using a mobile phone number as a proxy.
Eight financial institutions - representing 90% of UK current accounts - have already committed to offering the new service from spring 2014, with discussions continuing for more institutions to join. While there are existing ways to pay using a mobile, the collaborative Payments Council project marks the first service with the potential to link up every bank account in the country with a mobile number.
Registration for the service will be strictly on an 'opt-in' basis. The participating financial institutions will invite their customers to register shortly before launch 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 likely to sign up
Over 5,000 consumers participated in Payments Council research in which one in three smartphone users said they were either definitely or extremely likely to sign up to the new service at launch. The consumer research also highlighted the importance of the security of mobile payments.
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 disable remotely an account for customers to prevent any fraud. Beyond these common features, providers will be free to innovate and customise exactly how they offer the service.
The new mobile payments service doesn't move money by SMS –the system used to send text messages. The money is moved directly between accounts using tried and tested payment schemes: 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 ATM transactions last year.
This new service could transform bill payments in UK. However, it won't if you haven't adapted your bill collection systems to accept payment via Faster Payments and to take advantage of the extra data that can be linked with the payment. It would be even more effective if you use QR codes on your invoices.
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