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Success of innovative new payment methods will depend on consumer trust, says expert


The success of new payment methods under development and potentially available in the future will ultimately be determined by the level of trust consumers have in them, an expert has said.

Specialist in technology and payments law Angus McFadyen of Pinsent Masons, the law firm behind Out-Law.com, made the comments in response to the results of a new survey conducted on behalf of the Payments Council, a body which is responsible for ensuring that payment services work in the UK.

The survey of more than 4,000 UK adults found that 42% believe they will not need a wallet or purse to pay for goods or services in 2025 because they will be able to rely on alternative technologies instead.

Just over half of those surveyed believe that they will be able to use their fingerprints to conclude transactions by then, whilst approximately one third of consumers think that the technology to pay for things through iris scans or by voice command will also be available in 2025.

However, the survey revealed that 62% of UK adults are concerned that payments made through new technology "will not be secure". Angus McFadyen said that, ultimately, consumer trust would determine the success of new technology that provides means of payment.

"The use of any payment form is built on trust – this is core to even the use of cash – and trust is not built overnight amongst consumers or businesses," McFadyen said. "Although we’re currently seeing a glut of new market entrants, I think that we’ll see a more conservative approach being adopted in a few years time as these non-traditional operators grow and start to suffer the types of issues, such as high profile system glitches, faced by traditional payers like banks."

The expert described the "adoption of new payment forms" as "slow", outlining the difficulty mobile payment providers have faced in gaining "traction" for their methods.

"Contactless payment method technology has been more successful than mobile, but consumer adoption is still lower than expected. Any big shift in the industry takes time," he said.

The survey results were contained in a report (31-page / 2.17MB PDF) called 'Pay Your Way 2025: Future Payments' which was authored by futurologist Dr Ian Pearson. He detailed other potential alternative payment methods that could be developed in years to come.

He said that the technology already exists to allow data to be "transmitted electrically through the skin" and that this could work well because handshakes are "a well-established social ritual" and an expression of trust.

In addition Dr Pearson also said that "pieces of security jewellery", such as rings or necklaces, could be used to pay for things.

"Digital jewellery will make large advances in the 5-10 year period, and some will be designed as means to hold or transfer cash or authenticate transfers," he predicted. "Pieces of jewellery could be worn so as to make transactions very simple, while verifying presence, and even combining with electronic data transfer during a handshake."

Dr Pearson also addressed the potential for a range of other payment methods to emerge, including through "augmented reality" technology. This, he said, is, where "computer generated information or graphics" would superimposed onto a visor or even contact lenses to allow payment to be made through individuals' "field of vision".

Currently the Government is holding a consultation on the future regulation and governance of the payments industry. It has expressed a desire to change the current regime.

McFayden questioned what part the Payments Council would play in "shaping the future" of the payments industry after saying that the body had "suffered in light of the cheque withdrawal affair" and despite it providing a "valuable channel through which the industry has joined up, achieving collaboration on issues such as account switching".

The Payments Council has now responded (78-page / 617KB PDF) to the Treasury's consultation and in an accompanying statement insisted that it is "a body that is fit for the future" following changes it has made to its organisational structure. It said it is "ready and willing to deliver change quickly and efficiently".

"Ultimately, regardless of the importance of our structure and governance we will be rightly judged on what we deliver, and we need to remain focused on delivering two major projects that will make a real positive difference to customers (as early as) next year," Adrian Kamellard, Payments Council chief executive, said. "The first of these is the launch of a new service to make switching current accounts faster, easier and hassle free. The second is a new cutting edge mobile payment service that will enable customers of all banks to make secure account to account payments without needing to know the recipient’s bank account details, only their mobile number."

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