Dr. Jan Deepen, co-founder of mobile payments company SumUp, explains why in the next twelve months we will see mobile payments enter our everyday lives.
In terms of widespread implementation, mobile payment technology has been gathering momentum for a number of years, but has remained somewhat under the radar. However, this is going to change in the upcoming months. In my opinion, we are very close to the tipping point. As various factors ranging from technological developments to changes in attitude coalesce, mobile payments technology, in the next twelve months will transform the way we all pay for things.
The term mobile payments can refer to a whole range of methods in which smartphones and tablets devices are used to process financial transactions. This includes concepts such as mobile point-of-sale (mPOS), the mobile wallet which allows paying for goods directly with a phone and mobile money transfers.
mPOS allows business owners to process transactions without the need for a traditional card reader or till system. It is the growing use of mPOS technology by merchants which could provide the catalyst for the adoption of wider mobile payments technology. The reason for this is two-fold:
First, with more businesses using mobile phone technology to let consumers pay for goods, the perception of the technology is manifestly changing – put simply, people are getting more comfortable with seeing mobile phones used for financial transaction in their everyday lives.
Second, the availability of high speed internet connections and the development of mPOS technology have allowed the creation of a new wave of innovative companies which are compliant with rigorous financial regulations and familiar with creating complex payments products. There is a groundswell of industry experience in the mPOS sector that will permeate into the wider payments sector and will help consumer-friendly, financially compliant products to develop faster.
The vast majority of us are spending increasing amounts of time on our mobile devices, using them for a whole range of things including shopping, booking holidays and checking bank balances. It is a natural process that these devices will form the backbone of our financial transactions. The ubiquity of mobile and smart devices combined with the ease and relative affordability of mobile payments technology is a key driver of growth. According to Gartner, the value of global mobile payment transactions reached $235.4 billion in 2013.
mPOS technology is becoming particularly popular for a range of reasons. For merchants and businesses, mPOS systems are an attractive option because they offer a flexible and thoroughly affordable means to accept and process card transactions, while still presenting users with a recognisable interface. Unlike traditional card payment companies, which use bulky and static card terminals, mPOS harness the technology which already exists in users’ phones and tablets.
Crucially for small businesses, mobile payments companies such as SumUp require no rigid contracts and there are no expensive set up costs. It is the cost of renting and installing traditional card acceptance units which deters many smaller businesses and traders from accepting card payments. This can often result in ‘cash only’ – much to the ire of casual shoppers and to the detriment of those companies’ bottom lines. Over 120 million transactions are lost in the UK every year due to businesses not having the facility to accept card payments, according to research from Judo.
For many, the final part of the puzzle required to ensure that mobile payments are fully accepted is linked to assuaging security concerns. This is simply about educating people and normalising the idea that mobiles can be used to pay for goods. The established mPOS companies are working closely with financial organisations such as MasterCard and Visa and as a result, are fully certified by major credit and debit card players. Some companies, including SumUp, are also licensed by the FCA. The combination of these measures ensures that payments are processed with the highest security standards for card payments.
Everything is in place for mobile payments to become the dominant way in which we pay for things. mPOS is the most straightforward form of mobile payments as both merchants and consumers are presented with recognisable and easy to use interfaces and card readers. This year will see the mPOS sector grow rapidly, which in turn is likely to spark a wider adoption of mobile payments technology. As we all start to get comfortable with the concept of using smartphones in financial transactions and as the technology becomes more developed, the move towards seeing a phone as a wallet becomes inevitable.
Sunak warns of bill to be paid to tackle Britain’s ‘exposed’ finances – FT
(Reuters) – British finance minister Rishi Sunak will use the budget next week to level with the public over the “enormous strains” in the country’s finances, warning that a bill will have to be paid after further coronavirus support, according to an interview with the Financial Times.
Sunak told the newspaper there was an immediate need to spend more to protect jobs as the UK emerged from COVID-19, but warned that Britain’s finances were now “exposed.”
UK exposure to a rise of one percentage point across all interest rates was 25 billion pounds ($34.83 billion) a year to the government’s cost of servicing its debt, Sunak told FT.
“That (is) why I talk about leveling with people about the public finances (challenges) and our plans to address them,” he said.
The government has already spent more than 280 billion pounds in coronavirus relief and tax cuts this year, and his March 3 budget will likely include a new round of spending to prop up the economy during what he hopes will be the last phase of lockdown.
He is also expected to announce a new mortgage scheme targeted at people with small deposits, the UK’s Treasury announced late on Friday.
Additionally, the government will also announce a new 100 million pound task force to crack-down on COVID-19 fraudsters exploiting government support schemes, it said.
(Reporting by Bhargav Acharya in Bengaluru; Editing by Leslie Adler and Cynthia Osterman)
G20 promises no let-up in stimulus, sees tax deal by summer
By Gavin Jones and Jan Strupczewski
ROME/BRUSSELS (Reuters) – The world’s financial leaders agreed on Friday to maintain expansionary policies to help economies survive the effects of COVID-19, and committed to a more multilateral approach to the twin coronavirus and economic crises.
The Italian presidency of the G20 group of the world’s top economies said the gathering of finance chiefs had pledged to work more closely to accelerate a still fragile and uneven recovery.
“We agreed that any premature withdrawal of fiscal and monetary support should be avoided,” Daniele Franco, Italy’s finance minister, told a news conference after the videolinked meeting held by the G20 finance ministers and central bankers.
The United States is readying $1.9 trillion in fiscal stimulus and the European Union has already put together more than 3 trillion euros ($3.63 trillion) to keep its economies through lockdowns.
But despite the large sums, problems with the global rollout of vaccines and the emergence of new coronavirus variants mean the future path of the recovery remains uncertain.
The G20 is “committed to scaling up international coordination to tackle current global challenges by adopting a stronger multilateral approach and focusing on a set of core priorities,” the Italian presidency said in a statement.
The meeting was the first since Joe Biden – who pledged to rebuild U.S. cooperation in international bodies – U.S. president, and significant progress appeared to have been made on the thorny issue of taxation of multinational companies, particularly web giants like Google, Amazon and Facebook.
U.S. Treasury Secretary Janet Yellen told the G20 Washington had dropped the Trump administration’s proposal to let some companies opt out of new global digital tax rules, raising hopes for an agreement by summer.
“GIANT STEP FORWARD”
The move was hailed as a major breakthrough by Germany’s Finance Minister Olaf Scholz and his French counterpart Bruno Le Maire.
Scholz said Yellen told the G20 officials that Washington also planned to reform U.S. minimum tax regulations in line with an OECD proposal for a global effective minimum tax.
“This is a giant step forward,” Scholz said.
Italy’s Franco said the new U.S. stance should pave the way to an overarching deal on taxation of multinationals at a G20 meeting of finance chiefs in Venice in July.
The G20 also discussed how to help the world’s poorest countries, whose economies are being disproportionately hit by the crisis.
On this front there was broad support for boosting the capital of the International Monetary Fund to help it provide more loans, but no concrete numbers were proposed.
To give itself more firepower, the Fund proposed last year to increase its war chest by $500 billion in the IMF’s own currency called the Special Drawing Rights (SDR), but the idea was blocked by Trump.
“There was no discussion on specific amounts of SDRs,” Franco said, adding that the issue would be looked at again on the basis of a proposal prepared by the IMF for April.
While the IMF sees the U.S. economy returning to pre-crisis levels at the end of this year, it may take Europe until the middle of 2022 to reach that point.
The recovery is fragile elsewhere too. Factory activity in China grew at the slowest pace in five months in January, and in Japan fourth quarter growth slowed from the previous quarter.
Some countries had expressed hopes the G20 may extend a suspension of debt servicing costs for the poorest countries beyond June, but no decision was taken.
The issue will be discussed at the next meeting, Franco said.
(Additional reporting by Andrea Shalal in Washington Michael Nienaber in Berlin and Crispian Balmer in Rome; editing by John Stonestreet)
Bank of England’s Haldane says inflation “tiger” is prowling
By Andy Bruce and David Milliken
LONDON (Reuters) – Bank of England Chief Economist Andy Haldane warned on Friday that an inflationary “tiger” had woken up and could prove difficult to tame as the economy recovers from the COVID-19 pandemic, potentially requiring the BoE to take action.
In a clear break from other members of the Monetary Policy Committee (MPC) who are more relaxed about the outlook for consumer prices, Haldane called inflation a “tiger (that) has been stirred by the extraordinary events and policy actions of the past 12 months”.
“People are right to caution about the risks of central banks acting too conservatively by tightening policy prematurely,” Haldane said in a speech published online. “But, for me, the greater risk at present is of central bank complacency allowing the inflationary (big) cat out of the bag.”
Haldane’s comments prompted British government bond prices to fall to their lowest level in almost a year and sterling to rise as he warned that investors may not be adequately positioned for the risk of higher inflation or BoE rates.
“There is a tangible risk inflation proves more difficult to tame, requiring monetary policymakers to act more assertively than is currently priced into financial markets,” Haldane said.
He pointed to the BoE’s latest estimate of slack in Britain’s economy, which was much smaller and likely to be less persistent than after the 2008 financial crisis, leaving less room for the economy to grow before generating price pressures.
Haldane also cited a glut of savings built by businesses and households during the pandemic that could be unleashed in the form of higher spending, as well as the government’s extensive fiscal response to the pandemic and other factors.
Disinflationary forces could return if risks from COVID-19 or other sources proved more persistent than expected, he said.
But in Haldane’s judgement, inflation risked overshooting the BoE’s 2% target for a sustained period – in contrast to its official forecasts published early this month that showed only a very small overshoot in 2022 and early 2023.
Haldane’s comments put him at the most hawkish end among the nine members of the MPC.
Deputy Governor Dave Ramsden on Friday said risks to UK inflation were broadly balanced.
“I see inflation expectations – whatever measure you look at – well anchored,” Ramsden said following a speech given online, echoing comments from fellow deputy governor Ben Broadbent on Wednesday.
(Editing by Larry King and John Stonestreet)
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