My brother works for a large investment bank & spends a lot of time thinking about the finer details of various financial instruments.
He raised an interesting issue, specifically about London's Oyster card (stored-value card for Tube & Bus travel), but I'm wondering if it applies generically to mobile payments as well.
It's a simple question which is surprisingly difficult to answer: Does the money on a stored-value card belong to the user, or the provider? If Transport for London (in the Oyster example) or a mobile operator (for a mobile wallet or even prepay credit) goes bust, can you get the money back? Or are you at the back of a long list of other creditors? Related to this is what happens if the phone or card breaks.
Given the huge % of the world that uses prepay accounts for mobile - and presumably given that operators will want to avoid credit risk for postpaid users with mobile wallets in future - this is far from an academic question. I've seen some estimates recently that suggest $10's of billions may get spent annually on mobile payments with NFC.
At that level, it's certainly relevant to ask who it belongs to, and what happens when things go wrong. Let's face it, given recent events it seems that normal banks aren't as safe as we used to think - so would you trust a mobile operator to give you better protection for your cash deposits?
(Incidentally - my brother tried to get an answer about Oyster credit, but eventually gave up. He couldn't even find someone who understood the question).
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