M-payments will not replace cash

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M-payments will not replace cash

Cliff Saran
The concept of mobile phone-based e-cash replacing paper money is far from a reality and end-users are unlikely to demand this form of service.

Speaking at the GigaWorld conference in Paris last week, Martha Bennett, an analyst at Forrester Research, said she believes there are serious business and technical barriers to mobile payment systems. She said operators are making the cost of mobile payments prohibitive.

"Mobile phone payment systems have a chance if they are cheaper and more convenient than traditional cash or card payment methods," she said. "But merchants are hit by a double whammy as they have to pay both the standard credit card transaction fee and an operator fee."

In February, Paybox, the biggest mobile payment provider in Europe, pulled out of the UK market, citing a lack of co-operation between banks and mobile operators.

Bennett also said the phones themselves were not reliable enough to replace cash or cards because they tend to crash, they only work where there is a signal and they have limited battery life.

In addition, payment technology has moved forward since the industry began touting mobile payment systems. For example, retail chains Tesco and Marks & Spencer are running trials of "chip and Pin" technology that allows consumers pay for goods by typing their Pin at the checkout.

Bennett said such schemes alleviate the need for mobile payment. Another example is train tickets. "If consumers can buy train tickets from a machine that accepts card payments, why invest in something else?"

Even the London congestion charge SMS payment system is not strictly a mobile payment service, according to Bennett, because users have to pre-register their payment details.

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