Silicon Valley has for some time now declared an all-out war on our non-electronic habits, changing them to fit around their technology. It has been a gradual process but thinking about it, we certainly don’t read books the way we used to. Writing an essay barely involves a pen anymore, we can go grocery shopping without even leaving the house and our fitness regime is becoming a lot more informative. It now seems tech companies have got their eyes set on the way we pay.
Companies like Paypal have, for more than ten years now, been helping us buy things online. They’re making financial transactions from our own bank account to someone else’s that much easier. But that isn’t good enough anymore. Real world transactions should and will become as easy and painless. Why should we carry those heavy wallets in one pocket when we all have sophisticated electronic devices in the other?
Paying with your phone is definitely not something we are that used to in the UK but for last few years, the USA has been inundated with different apps that can act as credit card holders. The most interesting one is Google Wallet - an app anyone can download on their Android phone. The premise is very simple - add your card credentials and then proceed to the register, paying wirelessly using your phone’s NFC. But Google Wallet hasn’t lived up to expectations. Debates over credit card fees seem to be the prevailing reason, but as Apple found out last month, big retailers such as Walmart have their own services, which they need to push.
Apple finally decided to join the fray with Apple Pay, and everyone is hoping that it will be the publicity the technology needs to finally go mainstream. The service is available only on the iPhone 6, 6 Plus, the new iPads and the Apple Watch when it’s released. Although the service has been out for just a little over a month there haven’t been any major complaints, but we won’t find out about usage statistics until Apple’s next financial quarter announcement.
Google and Apple are not providing these services for anyone outside the USA yet - they want to get it right before it goes global. The USA is known for its high consumerism and these companies couldn’t ask for a better testing ground. What’s more, introducing a new payment system in a country with a whole new currency, banking system and consumer behavior will prove more difficult.
That leaves the UK an open playing field for anyone who wants to try. A serious contender is YOYO, a product of our very own Imperial Create Lab that has raised £3.1 million in seed funding from investment groups such as Telefonica and Firestartr. It is one of Europe’s largest seed funding rounds this year.
YOYO is an app which, unlike Apple Pay and Google Wallet, doesn’t allow you to pay directly through your credit card. An account is set up once you download the app and you use your card credentials to add funds to your account. Once you reach the register, the funds used are in the app, not in your bank account. Although this means that you have to top-up your account every time it runs out, it is a fairly painless process. What makes YOYO attractive to users is its voucher integration. Every time you spend money at a particular retailer YOYO remembers and, if for every 9 coffees you get one for free, YOYO will display the voucher for you to use the next time you’re at the shop.
Another fundamental difference is the use of the registered laser scanner to make the transaction; scanning a QR code instead of tapping your phone using NFC. Once the code is scanned, the funds are immediately removed from your account displaying your total and actual amount at all times. This give YOYO the advantage that it can be installed on any smartphone device running iOS or Android even the ones without NFC, which encompasses every iOS user who hasn’t upgraded to iPhone 6 yet.
The app also offers a platform for store owners to collect and display the data they need to run their business more efficiently- data that would otherwise be impossible to collect. A similar service is provided by Square Inc. - a Silicon Valley startup recently valued at $6 billion. It should be noted although Square’s business platform ‘Square Register’ has seen wide success, their payment app ‘Square Wallet’ has been recently pulled from both the Android and iOS app stores due to lack of interest.
YOYO for the time being is using a page right out of Facebook’s playbook and is expanding their user base; jumping from one campus to the next. It’s a move they believe will eventually bring in retailers, which any payments service desperately requires in order to succeed.
Payment systems are very much in their infancy, especially in the UK. However, startups like YOYO are making real headway. It is very early to call but the sky is the limit and YOYO’s recent deal with Snapchat to provide a money transfer service is very much a testament to that.