Google entering UK P2P payments

Google entering UK P2P payments
Last week Google announced that it will be rolling its email based money transfer system to the UK. The feature was launched about two years ago in the US and allowed those with a Gmail account to hover over a $ sign and add money to an email message like an attachment. It is expected that it would work similarly in the UK, with a $ sign naturally replaced by £. Why now? Why P2P, and not, for example, HCE-based NFC payments, ahead of the expected Apple Pay launch? We admit we don’t have insights into Google strategies (and if we did, we couldn’t blog about it), but here are some of my thoughts. P2P payments has rapidly become a competitive space in the UK. Consumers can already choose between PayPal and other “wallets” or individual bank-based initiatives, such as Barclays’ PingIt and Natwest Pay Your Contacts. Also, last year, Paym, an industry-wide solution was launched in partnership with banks. Paym recently reported having signed up 1.8 million consumers who transferred £26 million. Admittedly, it’s not much yet, but with some banks so far it’s only possible to sign up to receive payments via Paym, but not send. While all these solutions are making more consumers more comfortable with the idea of sending money based on a mobile phone or an email address, at the same time, Google will have to differentiate to stand out from the crowd. One clear differentiator is the email-based approach. While I don’t have specific numbers, my sense is that Gmail is a popular mail service in the UK, and all these customers will now be able to enjoy a new feature. Assuming they like what they see, and start sending money to each other, Google is likely to enjoy increased wallet balances, at least until the recipients are ready to cash out. I also suspect this is a customer acquisition play for Google Wallet, which has not received as much publicity in the UK as it did in the US. Every Google email user can send money, but you do need a Wallet app to accept money. Once Google Wallet establishes a customer base, it can then take on Apple Pay more directly by rolling out its full wallet services to Android users in the UK. With Android representing ~60% share of smartphone users and a growing contactless acceptance infrastructure, the UK market might prove to be an attractive opportunity for Google Wallet.

Paym goes live

Paym goes live
Paym is a UK payments industry initiative to allow mobile payments to be made just using a mobile phone number. Those of you who watch the UK industry will note that Barclays launched a similar service, PingIt, 2 years ago, which has been widely lauded both in the payments industry, but also in the press. This blog is less about these services, but more about the press reaction to innovation generally. Payments innovation is tough, and a new payment method is even tougher. Payments is a 2 sided network. That is, typically both parties have to be part of the network, and that there have to be enough people in the network to make it attractive. That creates something of a “chicken and egg” – how do you create an instant network? To that end, I was disappointed with the BBC coverage. Firstly, rather than 20m customers won’t have access for awhile, it was awhile before it said 30m would have access from today. A rather different spin, particularly when PingIt launched with no customers guaranteed that it would work! Will Paym succeed? I hope so. Any innovation is to be applauded, and I do hope this starts eroding the numbers of cheques written. My enthusiasm is tempered by a couple of thoughts. I trust these are taken not as negative, but highlighting the challenges ahead for the launch of ANY new payment scheme. Firstly, how often do I need to pay another person money? The infamous splitting of a dinner bill in the UK is rare – instead of cash, we just all put our debit or credit card in. Secondly, the service is limited to smartphones, and most banks already have apps which allow payments to be made. Admittedly, some banks (I’m talking about you Halifax!) have an app so poor even writing cheques becomes appealing! That leaves the masking element – using a phone number, not your banking details. I’m not sure how much of an issue that is for most people. As most payments are push payments, you have to question why the recipient wouldn’t want you to see their details. And as the majority of debit cards have the banking details on them, I’m not sure the argument about simplicity is strictly true. There is a formula that checks an account number is valid for a sort code. A mobile number is only 3 digits shorter, and can’t be checked, nor can you tell initially whether its registered for the Paym scheme. It’s a minor quibble, but consumers are fickle – it will only take one issue early in their use of the system to revert back to the old method payment.