Is mobile payment going too far when cash has become unacceptable?

When mobile payment with smartphones has become the means of choice at retail outlets, the central bank of China needed to remind businesses they should not reject cash payment.

Once upon a time, people said “cash is king”. Not anymore.

In most retail outlets in China, mobile payment with smartphone apps WeChat Pay (of Tencent) and Alipay (of Alibaba) has become the de facto option. Customers with credit or debit cards only, including the cards on UnionPay (China’s clearing platform), are sometimes in bad luck. It turns out even cash payment may not go all the way, which prompted the central bank, People’s Bank of China, to issue a warning notice to the retailers that rejecting cash is against the law.

This fast and massive move towards mobile apps based payment dwarves the slow uptake of NFC based contactless payment championed by the technology companies. This is despite the tech heavy weights Apple and Google having been supporting NFC payment since 2014. The enthusiasm in which consumers and businesses embrace it, even with the clout of Apple and Google thrown behind it, has been underwhelming.

According to the research firm Berg Insight, the total number of NFC enabled POS terminals grew by almost 100% in 2017 to reach 54.5 million, most actively in North America and Western Europe. Only about 30 million of the terminals have been activated.

Apple has refused to disclose user numbers or transaction values related to Apple Pay, although different research has put the number of users who could pay with Apple Pay and who actually did it at about 3%. The uptake of Android Pay is no better. The comparable adoption rate is estimated at about 1%.

It is safe to say Apple CEO Tim Cook’s ambition to replace wallets with Apple Pay has not gone too smoothly. Mr. Cook himself was reported to have been rejected to pay for his coffee with Apple Pay by a barista, reported The Information.

In contrast, WeChat Pay and Alipay did not only handle over 90% of China’s $16 trillion mobile payment transactions in 2017, they are also actively expanding overseas. An agreement was signed last week with the Kenya based Equity Bank to bring the services to eastern Africa including Uganda, Tanzania, Democratic Republic of the Congo, South Sudan, and Rwanda, in addition to Kenya. With a smartphone penetration level much lower than in China, we do not believe retailers in Africa will rush to refuse cash payment though.

Crime moves upmarket as fraud becomes the UK’s number 1 offence

New research from Experian claims fraud is now the UK’s most common criminal offence, much to the dismay of thugs and hoodlums everywhere.

The company’s Annual Fraud Indicator 2017 estimates the annual cost of fraud in the UK is £190 billion, exceeding the total Gross Domestic product of 148 out of 191 countries on the planet. Splitting it down, private sector fraud costs the UK economy £140 billion over the course of 2017, while it is only £40.3 billion in the public sector.

“Awareness of the dangers fraud poses is growing, but the total of £190 billion is startlingly high,” said Nick Mothershaw, Director of Fraud and Identity Solutions at Experian. “Plastic card and online banking fraud continues to increase, so new regulations which make it harder for fraudsters to use someone’s cards online are a necessary step.

“Fraudsters are shamelessly opportunistic and are now turning their attention to the pensions release, lured by the promise of high value returns when their scams are successful.”

Procurement has been pinned down as the biggest sucker for fraud, but the report notes new technologies are opening up new opportunities for the tricksters. Online Banking fraud has grown by 226% and Telephone Banking Fraud by 178% in the past year, with millennials getting caught out as well.

While this number is surprisingly high, the growing popularity of mobile money and contactless payment solutions might add to the problem. Another area which we haven’t seen the impact of is social media.

With the online world taking more control of our daily lives, authentication techniques using social media accounts are becoming more common. The vast majority are used for free services, but that doesn’t mean someone won’t work out how to commit a white collar crime using this little development. Individuals seems very enthusiastic about handing out their personal information online, and in truth we haven’t seen any particularly devastating negative impacts yet. That doesn’t mean it isn’t possible though.