Mobile payments to replace the cheque

Mobile payments: Thursday 17th December 2009

You may already know that the cheque is being faced out. The UK Payments Council has agreed on the 31 October 2018, as the official closing date of the 350 year old payment system. This deadline is however provisional and will only be enforced if alternative methods are in place by then.

Fear not! An obvious alternative to the cheque is mobile payments, and several systems are already in place. The m-payments industry has been growing at fast pace. Mobile is now secure enough to accept payments and m-payments are being backed by major banks, such as Barclays. It's evident that the trust in mobile payments has risen significantly in the last year, and DMA report how, 35 percent of users already engaged in mobile commerce.

The emphasis has so far been on allowing mobile users to make payments. The most popular choices are premium rate SMS, Wap billings (e.g. Payforit) and RFID Payments, which uses Near Field Communication technology to allow users to pay small amounts by swiping their mobile against a reader. These methods are likely to become more popular as the cheque system closes.

Square, which was launched this month by Twitter's co-founder Jack Dorsey, on the other hand accept payments. Square is a card-reader which plugs directly into the audio jack on the mobile handset. It takes payments, locate the customer on a map, and e-mails a receipt. It currently works for iPhone and it is being developed for BlackBerry and Android. This is very neat and seems to be a great substitute for small businesses, sole traders, clubs, charities and schools who are currently using cheques to take payments.

Smaller organisations and individuals are also expected to favour the end of the cheque as it is the most expensive transaction methods and the UK Payments Council appear to be very confident in its decision and states: "there should be no scenario' for using cheques by 2018."

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