Text usury

[Dave Birch] In the April E-Finance and Payments Law and Policy (a fine journal), I read about text message loans in Finland (and the rest of Scandinavia), a subject about which I knew absolutely nothing but found absolutely fascinating. Here’s what’s going on. The consumer sends a text message to the company offering the loan (these are typically in the range 50 to 200 euros). The message contains the consumers ID number and bank account details as well as the amount of the loan. The company checks the consumer’s credit and, if it is acceptable, sends back a link to web site with the terms and conditions. Once the consumer accepts these (by hitting “OK” on the relevant web page) the money is sent to their account. The companies do not charge explicit interest, but instead charge an arrangement fee (which is the equivalent, often, of an APR of several hundred percent). Wow.

It’s the future, I tell you, the future!

[Dave Birch] I was down at SMi’s Contactless Cards conference in London this week (I ran the NFC payments workshop there — remember our competition?) and picked up the impression that the London contactless roll-out is not going entirely as smoothly as it might. The cards are rolling out, but the terminals are not following the same trajectory. And where the terminals are out there, they’re not transforming customer behaviour. The small transaction focus may be hampering deployment…

Yo Sushi has found that the £10 limit greatly reduces the number of transactions it takes and it also said that the lack of portable contactless terminals was a problem as was the accreditation process.

[From Payments Industry Thoughts: London Contactless Payments Stuttering]

Yet I’m sure I detected more enthusiasm from some of the bigger retailers who were thinking about setting aside under £10 terminals or lanes.

Sainsbury’s is to start a contactless payments trial as part of a multimillion-pound revenue protection programme. The retailer is selecting a vendor for the in-store reading equipment and will begin testing the devices in the coming weeks. “The introduction of chip-and-PIN has reduced the number of card-based scams considerably, but we have seen a substantial increase in cash fraud,” said Sainsbury’s national crime and investigations manager Phil Wilson.

[From Sainsbury’s checks out secure payments systems – 08 May 2008 – Computing]

That’s a perspective I hadn’t looked at for a while. Since there is a fair bit of theft in the retail world — I think they call it shrinkage — reducing the amount in the till also reduces the amount of cash being pilfered. Another line in the business case.


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