Diana Clement: Virtual wallet logical step for smartphones

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Payments can be sent to other people via email or text. Photo / Thinkstock
Payments can be sent to other people via email or text. Photo / Thinkstock

The future is here. There's huge change happening in the way we pay for goods and settle debts.

In the past couple of months the long-talked-about cashless society has taken a giant leap forward. It's not far-fetched. Cellphones have already swallowed cameras, GPS devices and our computers. Becoming virtual wallets is the next logical step.

I already use my phone to send money via email to anyone who has a New Zealand bank account. I log into the ASB app on my smartphone, enter the email address or cellphone number of the person I want to pay and send the money. It's a great way of paying friends and family, says the ASB's head of digital experience Michael Ramsey.

This technology is useful for the group of friends divvying up the bill in a restaurant. Instead of all of them paying separately on cards because no one has cash, they just send payments to the friend that is paying via email or text.

From the middle of this month ASB customers will also be able to pay Facebook contacts.

To collect the payment, the recipient logs on to the bank's website, enters his or her cellphone number or email address, a payment code that came with the text or email, and a New Zealand bank account to which the money is to be transferred.

What's great is that the recipients don't need to have the app on their phone to receive the payment. They just need access to the internet to retrieve the money.

Where both sender and recipient are with the same bank, the transfer is instant, with no need for the money to be collected.

One thing I love about this method of payment is that it does away with the social embarrassment when the other person puts up an argument.

You send the money, says Denise Buckton, head of mobile and phone banking at ANZ, and the recipient can choose whether they collect it or not. They have 14 days to collect or the payment lapses.

A very useful smartphone feature started by the BNZ last month is the instant balance. This allows people to see the balance of their nominated account on their smartphone without having to log in. Another nice banking development is that Kiwibank has given smartphone users their own personal banker to communicate with. The TSB has launched a "bump" app, which allows people to transfer money from one Apple iPhone to another.

There are even more useful smartphone apps in use overseas and heading our way, says Derek Bonnar, CANSTAR's New Zealand national manager.

For example, says Bonnar, the ASB's parent company, the Commonwealth Bank of Australia, has launched Kaching (said Ka-ching), in which a PayPass terminal connects with a phone with near field communications capability (NFC), enabling cashless and wireless payments.

As NFC-equipped phones become widespread, the payment method will take the place of Eftpos. Bonnar believes we will see this happening as soon as next year. Some retailers already have PayPass terminals, such as McDonald's. Just this week NFC terminals were installed in my local BP station at Hauraki Corner on Auckland's North Shore.

Even smaller players such as credit unions and building societies are preparing for this technology.

Deane Johns, the New Zealand Association of Credit Unions' chief information officer, says member unions are about to release a new debit card that will work with Google Wallet, enabling NFC payments. Google Wallet allows the smartphone owner to load money into a Google Prepaid Card or to spend using a bank card that has been loaded into the smartphone's memory.

Meanwhile, Paymark, Telecom, Vodafone and 2degrees have teamed up to create the infrastructure necessary for this banking application and also to use phones to swipe on to public transport.

Another app that could come here, says Bonnar, is one enabling card-free cash withdrawals from ATM machines, as offered by the Royal Bank of Scotland in Britain. Customers of that bank use their smartphones to request a withdrawal of a certain amount. They receive a six-digit code that is used instead of a plastic card to withdraw cash.

There are other apps that have taken off overseas that I don't necessarily want to see here, such as payday loan apps which offer the type of instant loans that make poor people poorer.

When it comes to new technology, some bank customers jump on every development as soon as it happens. Others don't know about them and another group is too worried about security to do anything.

The new smartphone technology comes with a whole new set of rules for people to learn. Most of them are common sense.

Banking Ombudsman Deborah Battell has published a guide to mobile banking, which includes a list of security measures such as:

* Keep your phone safe.

* Monitor your accounts often.

* Notify your bank if you lose your phone or there are unusual transactions on your account.

* Set auto-lock on your phone and secure it with a password.

* Delete any text messages from your bank once you've read them.

* Get mobile phone security software.

Other security measures listed are much the same for online banking such as avoiding unsecured public wi-fi hotspots. Users should also consider installing anti-virus and security apps to protect their phones against hacking, viruses and malware.

An ordinary street thief would have to be pretty smart to crack most well-protected smartphones. Mine, for example, times out to auto-lock in less than a minute of being used, requiring a password before it can be accessed again. Even if it hadn't timed out, there are two more layers of usernames/passwords to access banking. The chance of some bloke in a hoodie managing to do that are pretty minimal.

There are also additional security features in the software such as setting up a sim card lock and a mobile tracker, which can track the smartphone if stolen. That's an awful lot more protection than my Eftpos card has.

Putting security into perspective, smartphones are safer banking tools than Eftpos and credit cards, which can also be lost, or stolen. It's much easier to shoulder surf someone entering their PIN at a point of sale or ATM, than it is when they enter those numbers on their phone.

That's because someone using a phone isn't forced to stand in a fixed position in a public place when they enter PINs.

The advantages of smartphone banking far outweigh the disadvantages.

As Battell points out, it's now easy to check your balances on the spot in a shop and make a decision about whether you can afford to buy X, Y or Z. More than once in recent months, I've transferred money from one account to another on the hoof.

Some people may ask why bother? The answer is that most people and their phones are rarely parted, making it easy to pay.

Some of these new technologies are cheap enough that even cash-only retailers may be willing to take to them.

- NZ Herald

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