The market for mobile payments has grown substantially over the last couple of years and is estimated to be worth $245bn by 2014. However, there is still a long way to go as the reality of using a mobile phone to make purchases is yet to be universally accepted and realised in the same way that shopping online has. Despite the market potential, mobile payments currently remain dominated by purchases of mobile content, including music, top-ups and ringtones. This sluggish uptake can be attributed to concerns over security, the inability of either Financial Institutions or Mobile Network operators to succeed in this space without the support of the other, and, more simply, the lack of services that have genuinely met the needs of both consumers and businesses.

With over three times the number of mobile phones in circulation as there are internet connections, the opportunities to develop solutions that offer genuine added value remains huge. Alongside convenience and flexibility, accepting mobile payments can greatly improve a business' cash flow; an issue which is especially pertinent given the average amount owed to an SME at any one time has grown from £25k to £32k in the nine months to September 2009.

In addition, mobile payments should also be seen as a front runner to replace traditional payment methods, most notably cheques. Currently 76% of SMEs receive payment by cheque, with over one billion cheques written last year despite their scheduled phase out by 2018. To date, no credible direct replacement method has been provided by banks and the possibility of a payments black hole looms large.

accepting mobile payments can greatly improve a business' cash flow

So what can mobile payments mean practically for an SME? The rapid growth in Smartphone usage brings about a number of possibilities through either dedicated apps or standard browser functionality. One such possibility, which has been developed by Cashflows the payments division of Voice Commerce Group, is turning the mobile phone into a virtual Point-of-Sale (POS) terminal that allows businesses to accept credit or debit card transactions.

In addition Cashflows' innovative technology allows the same mobile device to send invoices and receive settlement, transfer funds between accounts and even issue discount vouchers to customers to encourage repeat business. This form of mobile payment not only allows businesses to process payments whilst out and about but also negates the need to visit their bank during office hours to pay in cheques whilst providing all the convenience and security of a POS terminal without the high cost and associated technical issues.

Alongside benefiting the small business owner the same technology can make consumer's lives easier, allowing them to make mobile "cash" payments in shops just by holding their mobile phone next to a contactless payment device, in effect turning their phones into wallets. This type of technology is already an accepted part of daily life in parts of the Far East and growth in the UK is expected to accelerate in the coming years following the wide adoption of initiatives such as the Transport for London Oyster Card system.

Coupled with usability and accessibility the security of mobile payments is of paramount importance for both businesses and the end users and in order to support the growth of the market, voice biometrics is one such security method that is coming to the fore. VoicePay is a system developed by Voice Commerce that allows consumers to create a ‘voice signature', unique to the individual, to authorise financial transactions or confirm their identity via mobile phone. As well as protecting businesses from fraudulent transactions consumers benefit from an enhanced experience of simply speaking into their phone to confirm a mobile payments, as opposed to being obliged to remember multiple PINs and passwords.

In order to gain acceptance amongst the business community in the way that e-commerce has, mobile payment solutions reliant on eye-catching looks and ‘one size fits all' approach will clearly not be enough. In order to succeed, mobile payments must become secure, hassle-free and truly add value to the business through a range of supported services that can be tailored to the needs of that company, a challenge that is being worked on by an increasing range of diverse partnerships across the financial, mobile and technological industries.

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