Tech Talk: Balance of payments

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THE smartphone in your pocket right now is already a media player, camera, sat nav, radio and web browser – but its most valuable use is only now becoming clear.

It’s also a shop till. This functionality may not be valuable to you, but it certainly is to banks and phone companies – many of whom are currently engaged in a fight for space on your home screen. The idea, as they see it, is to handle your future transactions by plugging themselves into your bank account and taking a cut of the traders’ proceeds by way of commission.

Barclays, O2, Google and PayPal are among the first to offer mobile payment services which make it possible to transfer money instantly to almost anyone, just by keying in their phone number. There’s no need to share bank details; all you need is a current account and a mobile phone.

Barclays’ service is called Pingit, and the bank says it will transform the way we shop and spend. O2 says its Wallet offering will similarly revolutionise our lives. But are they really any easier than stuffing your debit card into a chip-and-pin reader?

Well, if you’re actually in a shop, probably not. But the high street is no longer a physical entity and nor does it extend merely to the web browser on your desktop PC. Traders want you to be able to buy from them wherever you are, preferably on impulse. The faff involved in typing in your card number might put you off, they reason; you’re less likely to waver if you just have to point your phone at a barcode.

And there are some instances where paying by phone would be a positive boon: getting on a bus, for instance, at a vending machine or a council car park. (Most of those still don’t accept £2 coins, though, so a smartphone may be a stretch.)

Exactly how you use mobile payments will depend on which system becomes pre-eminent. O2’s model is to use your phone as your wallet, digitising your existing cards and loading money on to your device via text message or at a participating retailer. Other services will let you pay for goods using a system known as Near Field Communication, which involves waving your phone in front of an electronic reader.

Carrying money around on your mobile does raise the question of what happens when you lose it. O2 and Barclays say it doesn’t matter, so long as your PIN number isn’t with the phone. But there is a balance to be struck between security and convenience, and it remains to be seen if the banks can deliver on both counts.