Individuals will be able to send and receive money via a text message when a new mobile payments service launches next year, it has been announced.
The new service will allow users to make secure payments directly to or from an account without the need to disclose the sort code and account number, with only a mobile phone number used as a proxy. Users will be asked by their banks if they want to opt-in to a database which will allow the sending of money by text.
Eight financial institutions, representing 90% of UK current accounts, have already committed to offering the new service from spring 2014. The launch will bring the UK up to speed with technology long in use in the developing world. Many African nations use systems such as M-Pesa, typically seen as a secure way to transfer funds quickly between individuals and businesses.
To help prevent abuse of the system, the Payments Council has confirmed that a passcode or similar security feature will be required to authorise payments. Payment amounts will also be capped for added security. Banks will have the ability to remotely disable accounts suspected of misuse.
Commenting, Adrian Kamellard, chief executive of the Payments Council, said: ‘This new service will offer a simple, secure way to split a bill for dinner, receive money from a friend or pay a tradesman without needing to remember or share account details.’ The Payments Council have said that limits regarding how much money could be transferred with the service would be put in place, but that the amount had not yet been decided.
The scheme will be managed by the Faster Payments service, which processed more than 800 million online and phone banking payments in 2012.
The eight institutions already backing the service are:
Cumberland Building Society
Lloyds Banking Group
Royal Bank of Scotland
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