The Payments Council has announced that users will be able to send and receive money over text message by 2014.
The idea is that text message transactions will make paying easier, without having to reveal a sort code and account number by simply sharing a mobile phone number instead.
The scheme is being backed by eight major banks, including: Barclays, Cumberland Building Society, Danske Bank, HSBC, Lloyds Banking Group, Metro Bank, Royal Bank of Scotland and Santander. Account owners will be asked by their banks if they would like to opt-in to the database that will allow them to send and receive payments by text message.
The launch will bring the UK up to speed with technology that is currently used in the developing world. In African nations, systems such as M-Pesa are used as a secure method to transfer fund quickly between individuals and businesses. According to the BBC it’s taken longer to catch up due to the technical challenge of building and testing a new database to power the system.
In recent years mobile payments have become more and more of a reality. With almost every mobile phone user able to send and receive texts, creating useful SMS payment services taps into the high level of familiarity that consumers have with text messaging. The concept will prove particularly useful to customers who don’t have smart phones.
Eight major financial institutions already have confidence in the technology. With the nature of SMS being extremely reliable and secure, perhaps SMS payments could stop online fraud too?
