[Dave Birch] One of the Consult Hyperion projects that I’m working on at the moment involves looking at ways to take simple financial services (in particular, payments) out to the less well-off. These people are dependent on cash, and therefore pay much higher transaction costs than the more comfortable members of society. Part of this work rests on the availability of products, specifically pre-paid products, and part of it depends on technology. Unless technology can make payments as easy as cash, it will be difficult to persuade people to give them a try even though they might be financially better off using the new technology. We all understand that customers value convenience. This is one of the reasons why contactless “touch and go” technology in general and the combination of contactless technology with mobile has so much to offer. We have a way of making electronic payments as convenient as cash.

Actually, it seems to me the given certain bounds, contactless technologies can exceed this expectation and deliver an experience that is much better than cash. Paying with an offline contactless product (such as a prepaid card) is quicker than paying with notes and coins (even without having to wait for change) and the fact that a mobile phone can manage “cash” for you is transformational, since we know that one of the key factors in driving up the adoption of prepaid products is the ready availability of balance information.

I tend to think, therefore, that bringing contactless technology into the payments space will do more than make credit and debit card use more convenient. It may well have much more of an impact by driving a wider range of prepaid products into the market and and driving a more significant displacement of cash than either magnetic stripe or chip & PIN have achieved.

I’m actually going to give a talk on this topic at the International Payments Summit in London from 11th-14th May 2009. I’ll be speaking on Tuesday 12th in the afternoon and I’m really looking forward to a great session. I’ll be on after Forum friend Roy Vella from RBS, who is a great speaker so it’ll be a tough gig, but I’ll do my best to explain the likely business impact of contactless and NFC technologies using some examples from around the world.

In an action of undiluted charity, the splendid people at Informa have not only offered a 15% discount to readers of this blog (e-mail me for the discount code) but they have also given me a delegate pass for the event — worth an astounding TWO THOUSAND BRITISH POUNDS plus VAT, now only 15% — to give away on this blog as a competition prize. So if you are going to be in London on those dates and you’d like to come along to hear some of the leaders in the field discussing how to deliver value for business in a challenging environment, then all you have to do is be the first person to respond to this post with the name of the person who appeared on the Bank of England’s 300th anniversary £50 note in 1994.

In the traditional fashion, this competition is open to all except for employees of Consult Hyperion and members of my immediate family, is void where prohibited and is virtually fat-free. The prize must be claimed within three months. Oh, and no-one can win more than one of the Digital Money Blog prizes per calendar year.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

7 comments

  1. We have a winner! It was indeed the first governor of the Bank of England, John Houblon. E-mail me your contact details Moshe and I will pass them on the organisers.

  2. Just missed it, darn! Am very interested in this conf but difficult to travel from Vancouver! Am planning for mobile banking networks, over fixed and wireless network infrastructures. Need to know updated marketing/regulatory issues.

  3. David,
    Have you looked at what is happening in the Phillipines and Kenya about using mobile phones to creae an inexpensive payment system targeted at the unbanked.

  4. Hi Philip, yes, we have been involved in M-PESA in Kenya for some years, just search “M-PESA” in the Google box at the top right of this page.

  5. Just missed it, darn! Am very interested in this conf but difficult to travel from Vancouver! Am planning for mobile banking networks, over fixed and chat wireless network infrastructures. Need to know updated marketing/regulatory issues.

  6. We have a winner! It was indeed the first governor of the Bank of England, John Houblon. E-mail me your contact details Moshe and I will pass chatthem on the organisers.

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