The European Central Bank (ECB) is working on a plan to allow consumers to transfer money using their phone numbers or email addresses rather than a complicated bank account number, a senior bank official said.
In an interview with Netherland-based RTL Nieuws broadcast on Monday, ECB executive board member Yves Mersch said the system would let a consumer link, for instance, their telephone number to their International Bank Account Number, or IBAN.
Under the system, Mersch said: "To send payment over your telephone from one country to another, you go onto your contact list, you take the name of a person, and you would immediately also get his IBAN."
The ECB has recently set up a steering committee with major European banks to work on the plan, Mersch said, and that it was not clear when the system would be ready, but the ECB would be able to provide a time frame by the end of the northern summer.
The chief obstacles to the idea are legal, not technical, he added.
Similar payment methods have been introduced by companies such as Google. At the end of last year, as a way to enhance Google Wallet, Google introduced in the United States the ability to allow Android smartphone owners to send money via text message to one of their Google contacts.
Meanwhile, in Australia, the uptake of the smartphone has become so prevalent Westpac recently predicted the country will be cash-free by 2022, given that one in three Australians are already using their smartphones to manage their finances.
Over the last few years, Australia's major banks including the Commonwealth Bank, Westpac, St George, and the National Australia Bank have been delivering technologies to cater for the cashless market. In April 2014, Commonwealth Bank of Australia introduced the first cardless ATM cash withdrawal service in the country. Westpac followed soon after, rolling out their cardless ATMs for customers. This meant that customers could use their smartphones to obtain a unique code before using it to make a cardless withdrawal.
Last March, Commonwealth Bank refreshed its mobile banking app to enable customers on any Android phone with near-field communication (NFC) running KitKat 4.4 and above to make tap and go payments.
Following closely behind, Westpac announced in April that owners of Samsung Galaxy S6 and S6 Edge would be able to tap and pay from their devices. This function is also currently available to Westpac customers who are owners of the Samsung Galaxy S4, Galaxy S5, S5 Mini, Galaxy Alpha, Note 3, Note 4, and Note Edge handsets.
More recently, NAB rolled out contactless smartphone payments on Android smartphones via NAB Pay to allow customers to pay for purchases using their phone's in-built NFC transmitter.