Paym mobile payment: how does it work and is it safe?

A NEW system that allows bank customers to send and receive payments using only a mobile phone number has launched today. Paym – pronounced “Pay Em” – is run by the Payments Council, an industry body that expects one billion such transactions to be made by 2018. According to The Guardian, more than 360,000 people have already registered for the service. But why do we need it and is it safe to use?

What is Paym?The technology allows people to pay or receive money using a mobile phone number, but without giving out their account number and sort code.

How do I use Paym?Firstly, you need to register your mobile phone number with your bank and download your bank's existing mobile payments app. Then, instead of adding a new payee using their account number and sort code, you can select their mobile number from your contacts list or enter the phone number manually. After confirming the details, you simply need to press 'send'. Up to £250 can be paid out each day. To receive payments, you must register your mobile number with your bank or building society and then specify the current account into which you would like the payments to go. Transfers happen at the same speed as existing mobile banking.

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Who can use Paym?The service will be available to customers of Bank of Scotland, Barclays, Cumberland Building Society, Danske Bank, Halifax, HSBC, Lloyds Bank, Santander and TSB Bank. For Barclays customers, Paym will be available via the bank's existing Pingit app, which offers a similar service. Clydesdale Bank, first direct, Isle of Man Bank, NatWest, the Royal Bank of Scotland and Yorkshire Bank have committed to joining the scheme before the end of the year. Over five million people – mainly customers of Nationwide Building Society – will not be able to join the scheme until early 2015.

Why do we need Paym?"Convenience is king," says Adrian Kamellard, chief executive of the Payments Council. The main advantage to using Paym is "how easy it is to use", he says. It is a convenient way to pay friends or family members without having to withdraw cash or know their account number and sort code. It could be used for sharing restaurant bills or to pay tradesmen such as plumbers and window cleaners. While Barclays' Pingit app offers a similar service, Paym is said to be the first industry-wide collaboration with the potential to link up every bank account in the country with a mobile phone number.

Is Paym safe to use?Nearly half of people surveyed by polling company Consumer Intelligence said they definitely would not use the service, with most worried about security and the risk of money going missing. Gabriel Hopkins, from the data consultancy FICO, tells the BBC that users should monitor their accounts to make sure that there is no suspicious activity as "with every advance in banking technology comes a new fraud risk". Nevertheless, the Payments Council insists the technology is secure, explaining that customers will be using their existing password-protected mobile banking app so the same security levels will apply.