UK peer-to-peer payments grow rapidly thanks to new legislation and apps
The peer-to-peer payments market, in which money transfers are made directly between consumers, is vast in Africa and other parts of the developing world, where fewer people have bank accounts. But such payments have been slow to catch on in the developed world where the bank typically processes transactions on behalf of consumers.
New legislation will link bank accounts to phone numbers in the UK, however, making peer-to-peer (P2P) payments significantly easier. In addition, apps like Barclays Pingit, and a new service expected to launch shortly from RBS and NatWest, are already moving into this space before the legislation goes into effect.
A report from Yankee Group in January 2013 predicted that this year mobile P2P payments in the UK would reach 26.1 million transactions, and nearly triple to 77.4 million by 2016.
Mobile banking in the UK has lagged behind other countries. In summer 2012, Bain & Company found that just over a quarter, 26%, of bank customers in the UK had performed a mobile banking interaction, compared to 47% in South Korea and 32% in the US.
Partly this is due to the poor banking services available, which also lag behind those in other countries. Peer-to-peer transactions could step in to make simple payments via mobile more widely available, offering new services while the banks attempt to ramp up their mobile banking offerings.
However, much work needs to be done before UK consumers will feel comfortable making the switch from plastic credit or debit cards to mobile phone apps or NFC-style transactions, whether through P2P transfers or directly through a bank.
Trust with personal info remains a major concern. In a survey by TrustE from January 2013, 43% of consumers surveyed in Great Britain said they strongly or tended to disagree with the statement that most companies can be trusted with their personal info online. Banking and money details are among the most protected personal info out there. As consumers move to adopt mobile features involving money transfers, many will be paying attention to security measures.
Still, interest in these services is certainly there. Thirty-eight percent of UK consumers said they would replace their payment cards with payments via a mobile phone, according to a Q1 2012 report from Aite and ACI Worldwide, and this number should increase as consumers are exposed to more mobile features offering payment options.
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