A new EU rule due to become law in the next few months means we will have a wider choice of smartphone payment apps allowing us to transfer money to friends and contacts. In the US, both Facebook and Snapchat offer payment facilities to users, through a debit card linked to a US-based bank account. These services could soon be available in the UK owing to the EU's Revised Payment Services Directive (PSD2). This comes into effect in January 2018, and means banks will have to open up consumer accounts to businesses that can initiate transactions directly from the bank.
"Effectively, this means social media platforms in the UK will have greater opportunities to launch their own payment platform, as they enable their users to make transactions without the need of a wallet such as PayPal, nor the need of entering IBANs or other details," says Myles Dawson of global payments company Adyen. "Instead, consumers can simply ask Facebook or WhatsApp to connect to their bank account and use their fingerprint to initiate a payment request to split the dinner bill or to buy a new pair of shoes."
Many people don't regularly carry cash around anymore. Debit and credit cards are now commonly used for retail payments, but are less helpful when it comes to dividing bar tabs and taxi fares, or splitting the cost of joint purchases between friends. Payment app Circle launched in the UK in April 2016 and has since acquired hundreds of thousands of users. You need to add your debit-card details to the Circle app before you can use it to send or receive money. Once set up, you can use Circle to split costs or remind friends to pay back money they owe, as well as send euros, sterling and US dollars around the world. Payments are kept secure by TouchID, a PIN, and two-factor authentication.
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Another service is Paym (pronounced "pay-em"), which has the potential to link every current account in the country with a mobile-phone number. More than £300m-worth of transactions have been completed since Paym was launched by the Payments Council (a network of financial institutions working on payment mechanisms) three years ago. Craig Tillotson, executive chairman of Paym, says: "By using mobile numbers, which many of us know already or have in our contact list, Paym allows you immediately to pay back and be paid back the exact amount, without having to resort to running tabs, IOUs or arguments." You'll need a smartphone to send money via Paym and the recipient will need to have registered their mobile number and bank account details too. One slightly confusing thing about Paym is that while some banks, such as HSBC and Nationwide, use the Paym brand name, others have their own product name. For example, Barclays calls it Pingit; the Bank of Scotland, Halifax and Lloyds Pay a Contact; and Cumberland building society Pay2Mobile.
Gmail users can transfer money via email. Using Google Wallet, Gmail users can transfer cash to anyone or use the feature to request money. The service is free if transferring cash from a bank account, but there's a small fee for using a credit card. PayPal's mobile app allows users to send money to almost anybody in the world with just their mobile number or email address. There are no PayPal fees when you send sterling to friends in the UK from your bank, debit card, or PayPal balance. PayPal also owns Venmo, one of the most popular payment apps in the United States.
In addition to general money-sending apps, there are several that allow users to split payments for specific purposes. Uber has a "split fare" feature to divide cab fares between two or more riders. For diners, Flypay integrates with the payment systems of participating restaurants, enabling customers to order their meal then pay or split the bill without having to call the waiter over.
Invest your spare change
If you have a few pennies left over after splitting your coffee bill or cab fare, you can effortlessly invest them into a stocks and shares Isa via Moneybox, a new app-based investment account. By linking to your online bank account, the app rounds up payments to the nearest pound, and, once a week, scoops them into one of three investment portfolios, chosen based on your risk appetite. The portfolios use cash or equity funds from Henderson, Vanguard and BlackRock. But for modest investors, high fees could take a big bite out of any returns. Moneybox charges a flat monthly fee of £1 (waived for the first three months), plus 0.45% a year. There are also underlying fund fees of between 0.22% and 0.24% to consider.
Yielders, a property crowdfunding platform which launched in April 2016, has become "the UK's first Islamic fintech firm to receive full authorisation from the Financial Conduct Authority", says the Fintech Times. Yielders offers Sharia-compliant investments in "carefully vetted assets" in London and the southeast of England, targeting "above-market yields". Interest payments are prohibited under Sharia law; the platform carries no debt, and all its properties are fully funded. Each investment has a typical lifespan of between three and five years, after which the property is sold on the open market. Yielders charges an initial 2.5% fee, a 10% management fee and 15% of the net capital gain when the property is sold.
WealthDunk is an online comparison platform for automated digital wealth managers, or "robo-advisers". The service, which was launched in April, aims to "demystify the offerings available and become the go-to online resource for information on online investment managers". It allows investors to learn about the most popular robo-advisers, including Nutmeg, Wealthify, MoneyFarm, Scalable Capital and True Potential Investor, and compare their fees. The service is free for investors, but WealthDunk does receive a "small fee" from the online investment manager if a client subsequently opens an account.
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