Cutting Room: mobile payments take off…in Slovakia


On a recent trip with Visa Europe, Samantha Tomaszczyk saw the increasing popularity of mobile payments, but still reckons we are a long way off full adoption of the service due to a lack of confidence in it

Six years on from the first trial of mobile-based payments in the UK, it’s fair to say the technology hasn’t quite caught on in the way many in the space had led us to believe it would.

In December, for example, analyst firm Juniper Research significantly scaled back its 2017 predictions for NFC transactions from $180 billion to $110 billion – with this figure including payments made using contactless cards as well as NFC-enabled handsets.

Similarly, Gartner reduced its 2017 transaction value estimates by 40 per cent last month, “due to disappointing adoption of NFC technology in all markets in 2012”.

Operators are still trying to catch people’s imaginations – Orange’s NFC Quick Tap and O2’s Wallet services, for example.

At the time of writing, UK operator EE had just unveiled its ‘Cash on Tap’ mobile payments service – in partnership with MasterCard – which will allow its customers with compatible handsets (at launch only the Samsung Galaxy S4, Galaxy S III and Sony Xperia SP) to make payments of up to £20 using their mobile.

A few days ago, O2 announced it is working with mobile money services provider Monitise to develop mobile payment solutions and, in February last year, Vodafone signed a deal with Visa to do the same – but at the time of writing none of these services had launched.

I was invited by Visa Europe to test the technology myself, not in the UK, but in the Slovakian capital of Bratislava, which, according to the payments provider, is miles ahead of other European towns in its take-up of mobile wallet services (see Backslap, back page).

Arriving in Bratislava, I had several preconceptions about contactless payments, most of them negative thanks to various reports of unintentional payments and double-charging by Marks & Spencer terminals.

And as I set off with my Samsung Galaxy S III, preloaded with the ‘O2 Wallet’ app, knowing this would be my first time paying for goods without cash or cards, it was both an exciting and daunting prospect.

There are several advantages to NFC transactions, as I discovered during my visit to Eurovea, a large shopping centre in Bratislava. The biggest ‘pull’ is convenience. People often have their phone out while queueing, and NFC means you can pause mid-text, hold your phone over the terminal and continue on your way. For transactions under €20 (or another limit set by the user), the time-saving aspect is particularly obvious, as you do not even have to unlock your phone to enter a PIN.

This may worry some who want the security of a PIN number, but settings can be changed via the app, meaning every transaction requires users to enter a PIN.

A daily limit on PIN-free spending can also be set in this way. This may be safer, but it means transactions take almost as long as if you were using a normal card (although customers can activate the app and type in their PIN while in a queue and simply hold the phone against the terminal once they reach the front).

The Slovakian bank which partnered with O2 to launch the service, Tatra Banka, also pointed out it has a ‘zero liability’ policy on money lost once a user reports their phone as stolen. O2 argued mobile payments are safer than card payments as the SIM can be deactivated instantly.

Many of the benefits NFC can bring are yet to become a reality. For example, O2’s ambitions are to allow users to store their bank card, travel card and loyalty cards on their SIMs. Visa Europe spoke of how, in future, taxi drivers will be able to receive payments by touching their phone against a passenger’s device – as handsets are transformed into terminals.

Poor adoption
For now, however, the advantages are limited, simply because not all shops take mobile payments, and those that do have different terminals with varying payment limits.

In Slovakia, for example, only terminals supplied by Tatra Banka accepted payments for transactions over €20. For the average consumer, it’s very difficult to know, on entering a shop, whether you will be able to pay for your purchase using your mobile and whether that purchase can be over €20. This is because not all shops with the ability to accept mobile payments advertise this fact. In fact, during my shopping trip, often the only way I could find out whether I could use the money stored on my SIM was to try to purchase something. This isn’t practical, and made me quite unpopular with several shop assistants who had to unpack my purchases because my payment had been declined.

As has been noted in various other articles about mobile payments, the service can only succeed if there is a collective and universal acceptance of it. And it needs to work.

The set-up and use of the mobile wallet I used was simple, but the problems I experienced when it did not work, and the uncertainty as to whether a store would or would not accept it, made it impractical.

While it is an impressive concept, it has a way to go before people can give up their cash and plastic with confidence.