Paym is the kind of mess you get when UK banks innovate

Paym launched today with wall-to-wall media coverage. It’s a new payment system developed by the Payments Council (the people in charge of making sure financial transactions in the UK work) that allows the sending and receiving of money using just a mobile number as identifying information.

PaymIt’s hardly the second coming – PayPal has been allowing the transfer of funds using a single identifier (in their case an email address) for fifteen years. Paym is built right on top of the UK payments system though, so funds can be sucked from a payer’s bank account and deposited into a recipient’s account quickly.

The press coverage is missing lots of the nitty-gritty detail of the system, though. Firstly, you must set it up with your bank to tie your mobile number to your bank account (as far as I can tell these two bits of info are then passed to a central Paym database, allowing the system to operate across multiple banks) which, as I discovered today, isn’t working quite as expected.

(It’s still not working now)

Secondly, Paym functionality can only be accessed through your bank of choice’s smartphone app, rather than through a standalone app or (as you might expect from a system using mobile phone numbers) text messages. Payments via mobile numbers are most prevalent in certain African countries through the M-Pesa system, which is designed to run on even the most rudimentary of mobile phones (think old Nokias). Remember, about 30% of UK mobiles are still dumbphones, and can’t run apps. Those people can’t use Paym.

Paym’s addressable userbase is further limited by the necessity of using an app. The mobile apps of the six big banks involved in the launch have been downloaded approximately 8.75 million for Android. As of March Android had a 54% market share over the iPhone’s 32% (according to analytics firm Kantar), so we can extrapolate roughly 5.2 million iPhone app installs for that same group of banks.

That means a total of (roughly) 13.95 million people in the UK can use the service – about 27% of those aged 16 and up (of course there’s nothing to stop more people downloading the apps – we’ll have to wait and see). Also remember that some 20 million banking customers don’t have access to the service yet (The Co-op Bank has bigger problems, and RBS’ infrastructure is in too much of a mess).

Paym is a two-way service (both parties must be registered for it to work), so for Bobby Moneysender all this means there is about a 1-in-6 chance his intended recipient will be able to receive his funds.

Compare setting up and using Paym with the current most-used method of transferring money (a vanilla bank transfer), which requires slightly more information (14 numbers rather than 11), can be done from the same mobile app as Paym, and doesn’t require the recipient to be opted-in. Suddenly Paym doesn’t sound like such a revelation.

Also, the branding is all over the place

Paym is a nice brand with a perfectly lovely logo, but only HSBC and Santander have chosen to keep it for their implementations. Lloyds, Halifax and TSB have chosen to call their version “Pay a Contact”, while Barclays has rolled Paym into their existing PingIt app. Another launch partner, Cumberland Building Society, went with “Pay2Mobile”.

Pay2Mobile
A Cumberland sausage

It’s safe to assume this disparity will only serve to confuse customers.

Failure to launch?

Will Paym take off? I hope so – many interesting payment experiments in the UK have fallen by the wayside due to lack of interest (o2 wallet springs to mind). The Payments Council expects to see 1 billion Paym transactions by 2018; you can’t fault their ambition.

Many more mobile payment schemes with hefty backers are in the works too – Weve is a mobile wallet / loyalty card hybrid backed by several mobile operators, while Zapp is a similar service from UK banks. There’s so much money being thrown at the wall, you get the impression something has to stick. But I get the feeling it won’t be Paym.

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