26 January 2016

Financial Times: Mobile payment transactions soar in US and UK

Mobile payment apps are soaring in popularity in the UK and US, but the world’s least developed countries are making almost no progress in the move to eliminate cash and cheque transactions that cost them billions of dollars annually.

The latest digital money index from Citigroup and the Imperial College London — which counts everything that is not cash or cheques as “digital” — reveals a deepening divide between the most and least “digital ready” countries.

“What we found this year is actually pretty stark,” said Citi’s global digital strategy head Sandeep Dave. “The incipient countries that have a long way to go, they almost showed a zero improvement against 2014 scores [while] the materially ready countries showed the most improvement.”

Finland topped the index for the third year running followed by Singapore and the US, which have been in the number two and number three slot respectively since 2014. The UK rose three places in 2015 to fourth.

Overall, though, progress was slow in 2015 and the report noted that the journey towards digital money would be a “lengthy one”. Mr Dave said the latest research showed that customers’ attitudes were the main thing holding countries back — not market supports, technology or digital money products.

Bankers in the UK — which had the joint biggest improvement of any country in the top quartile — said there had been a surge in popular adoption of new digital payment technologies over the past few years. Barclays’ mobile payments app Pingit hit its millionth business transaction in January, up from 100,000 a year ago. Contactless payments have driven a surge in card usage over cash for smaller transactions across all banks, and apps with built-in payments such as Uber are also reducing cash use.

Ashok Vaswani, chief executive of Barclays Personal & Corporate Banking, said customers “now expect banking to be completely on their own terms and instantly available on digital and mobile so that they can access their money and make payments whenever and however it suits them”.

Full article on Financial Times (subscription required)

© Financial Times