Mobile payments: Standalone systems blocking the way

Take-up of mobile payments is being held back by the lack of interoperability between banking systems in Europe, analysts believe.

While traditional online banking has achieved a degree of popularity - some 30 per cent of the UK population is thought to use it - mobile banking has to date received a somewhat lukewarm reception in Britain, despite banks' attempts to attract users to the services in order to encourage customer loyalty and cut customer service costs.

According to a new report by financial services researchers Celent, incompatible systems within the continent are preventing mobile payments such as proximity payments, remote payments and remittances from spreading between EU countries.

"These mobile payment schemes are typically standalone, meaning that they are not interoperable, whether across or within national borders. This greatly limits the scalability and acceptance of any one solution," the report notes.

To get things moving, Celent believes a Europe-wide system is necessary.

"It will take a pan-European payment infrastructure to move the mobile payments adoption needle. The only players seemingly capable of doing so are the card payment brands or the Sepa (Single Euro Payments Area) initiative, but little has been accomplished so far," the report adds.

Nevertheless, it predicts the UK is ripe for growth in one type of mobile payment - remittances - following the launch of services like Vodafone's M-Pesa and Natwest's Polish money transfer offering.

"The UK has a relatively high immigrant population, so if the M-Pesa and Natwest remittance services catch on in their specific corridors (UK-Kenya and UK-Poland), mobile-based remittances will gain considerable popularity," the Celent report said.