Pingit Mobile Payments App – A watershed for credit cards?

Barclays Bank has announced a new mobile payments service which could be as significant a moment as the launch of the credit card decades ago.

By linking customers' smart phone numbers to their current accounts, the service, Pingit will enable people to send and receive payments between UK accounts, simply by texting another mobile from their smart phone.

This is fantastic news for the mobile economy. 70 per cent of the world's population now have mobile phones: Apple has sold in excess of 60 million iPhones; Google Android OS is growing at 886% year on year and activates 160,000 devices per day. Mobile payments done in this way will completely cut out the manufacturing and administrative costs of issuing credit cards, but still keep the customer firmly in control.

It will also make my life much simpler - no more throwing in a heap of credit/debit cards after dinner out with friends!

Economic growth

pingitPingit may also prove to be well-timed.

The UK's Internet economy is growing fast with 14 per of companies now having a website geared up to sell their products and services - a figure which is likely to increase as more broadband is rolled out. Yet, the European Commission estimates that up to 60 per cent of cross border e-commerce transactions fail, due in part to the fragmentation of local payment systems. Barclays' plans to roll out the service for international transactions and bill payments might very well address this concern.

Risks still remain

But, like any technology, Pingit is not 100 per cent risk free. Assuming that Barclays has undertaken strenuous tests to encompass measures taken throughout the application's life-cycle to prevent exceptions in Pingit's security policy or its underlying system (vulnerabilities) through flaws in the design, development, deployment, upgrade, or maintenance of the application, the customer still has to use it.

Can he be sure that he's downloaded a verified version of Pingit, or confident that other third-party applications are not trying to break Pingit's software code illegally?

Cyber crime

The number, sophistication and impact of cyber crimes continues to grow. These threats evolve to frustrate network security defences, and many business systems, home computers and mobile devices do not keep what protection they have up to date. “Hacking” has evolved from the activity of a small number of very technical individuals to an increasingly mature marketplace where technical skills and data can be purchased by criminal groups to carry out specific attacks.

Wireless networks carry a high risk of crime being committed. Hackers can steal and erase information and data from mobile devices and disrupt wireless network traffic by overloading the network with information and phone messages. Viruses often infect mobiles causing them to switch of randomly or erasing all addresses and information stored within. Are international criminal laws harmonised enough to deal with enforcement?

Who is liable for a breach of security? In most cases the risks will lie with the service provider. However, where a mobile device is used to store value, such as where it is used as a form of electronic purse or travel card, the risk usually falls on the customer. Presumably, because value is transferred using the mobile device and not actually stored on it, the bank would take the risk.

Street muggings

We already hear of cases where account holders are forced to withdraw cash from the telling machine using their debit cards. This might stop with a mobile payment system, but then criminals can move on to target smart phone users in the street and force them to transfer money. Whilst it would be a stupid mugger who provides an audit trail to his UK-held bank account under these circumstances, but it would not be so if the account was held abroad.

Location data

Mobile phone companies, mobile phone application providers and mobile technology providers offer technology and applications that allow a user’s location to be tracked, either by using geotracking technology on the mobile device, or through mobile social applications, such as Foresquare and MyTown, which invite users to provide location-based information.

Transparency in using location data is an important legal issue and whether or not the company tracking your location has your consent to have this data and to use it. Many people do not want their location to be tracked or used for any purpose.

Advertising, direct marketing and sales promotion

If an organisation wishes to use location data to push or target offerings to customers, it raises issues under The Privacy and Electronic Communications (EC Directive) Regulations 2003 in that a consumer cannot be sent an unsolicited marketing email or SMS without expressly consenting or opting in to receiving these advertisements. This is subject to a limited exception where the person has previously contracted for services from a supplier and certain conditions have been met.

In each electronic marketing message the supplier must include a means by which a customer can request that they are not sent further electronic marketing messages. Some customers will no doubt see this as an undue invasion of their privacy. Others may not be aware that they are being tracked if they have not read their terms and conditions.

The code requires organisations offering these services to provide clear and accurate pricing information and clear advertising. It also requires certain information to be provided to customers, in a certain format and at certain times. PhonepayPlus has the power to fine organisations that do not comply with the Code of Practice.

Smarter business online

We have only just touched the surface of mobile Internet capability. Barclays' Pingit is a true innovative step that deserves recognition in a world of online opportunity. We just need to get smarter about how we are using these technologies and understand that above all the hype the threats are real:

  • Only download applications from trusted sources
  • Ensure that you smart phone had adequate security
  • Trust your instincts and stay safe when using your smart phone

Of course, in these times of austerity some people might just prefer to pay cash!