Get ready for a payments revolution

The ways in which people can make payments are becoming ever more sophisticated, says Tom Bulford. And this dynamic penny share is at the cutting edge of innovation.

I am trying to work out whether I am loved or hated. Not by my wife, or my teenage children. No, this is a relationship that goes back much further, for nearly 40 years in fact. It is with my bank.

Now, I am a loyal fellow. Once I have found something that works for me then I don’t like to change it. OK, so this is partly due to my natural lethargy, but I also like to think that my undivided support will reap some sort of reward – maybe a warm greeting from the bank to which I have always given the benefit of my custom.

Not a chance!

Each time I enter my local branch, it’s as if I am walking in there for the first time. Human contact is perfunctory and little more than a prelude to an attempt to sell me some new product. The telephone is no better. I have now risen to the ranks of ‘Premier’ status with this bank, but I fail to see how this confers any advantage.

Yet there is another side to this relationship…

A new wave of bank products

Every now and then the bank seems to favour me with a new innovation. I must have been one of the first to get a security card reader, a handheld device that means nobody can access my account unless they happen to have this reader and know my Pin code.

This is a dubious benefit, mind you. Promoted as “an extra level of protection for your more security-sensitive transactions, keeping your money safe from fraudsters”, it basically involves me in extra work – and isn’t “keeping your money safe” exactly what the bank is supposed to be doing without my help?

Next came a service which enables me to send up to £750 per day to anyone I choose just by sending a text message. It works by linking bank accounts to mobile numbers, and it could conceivably be useful. Here is the scenario. The phone rings late on a Saturday night. “Dad, I have run out of money. Can you send me £50 so that I can get a taxi home?” At which request I would either turn heartless, or comply and transfer the money, which could be retrieved in crisp notes from an ATM.

 

This is how easy paying could be…

And now I have had a third offer. “I am writing to tell you about an exciting new way to pay, that’s exclusively for customers like you” (“customers like you” presumably meaning customers that we have been ignoring since 1974). This is for “a sticker, small enough to put on the back of your phone to let you make contactless payments”.

If I get one of these stickers and put it on the back of my phone, I can make payments of up to £15 just by wafting my phone over a terminal. These will then show up on my credit card bill.

I am beginning to see what is happening here. Bank branches, with their lack of human contact and mechanical approach, are simply designed to become minor processing centres with the purpose of flogging banking products. But when it comes to new services, enabled by the internet and secure communications, the bank is all over me like a rash.

Whether I will take up any of these new services, I am not sure. When it comes to technology, I am not an ‘early adopter’. But this is not about me! This is about the very profound change that is happening in banking and payments. And just as high street banks are all over it, there are ways for you to profit too…

Payment in the electronic age

Payment relies upon a means of exchange – coins, for example, or a cheque – and a secure environment in which transactions can be processed. This is why the giants of the digital world have their eyes on payments.

A payment instruction can be formed into digital code and sent over a network secured both by physical means and also by clever software and personal passwords. Starbucks and Google have both been authorised by the Financial Services Authority to transfer money through smartcards and other electronic means. Mobile operators want a slice of the action too. In Canada, mobile network operator Rogers Wireless has applied to become a bank.

A revolution is under way here. The banks, beset by other problems and burdened by the legacy of outmoded methods are “transfixed like sheep in a field watching the sun come up”. That was the summing up of the director of one penny share business that is at the forefront of the payments revolution.

In the August edition of Red Hot Penny Shares I feature this hugely exciting penny share, and describe the payments revolution in depth. It is something that you need to know about.

This is a very exciting company which holds a huge opportunity in the revolutionary venture into the world of digital payments.

If you would like to take a free three-month trial, you will be sent a password allowing you access to all my Red Hot Penny Shares back issues.

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