How many of us still wear a watch? Carry a camera? Emails, MP3s, even the ancient calendar – your phone does them all. So why not go one step further and leave the wallet behind? So suggests the French App company Lydia.
Launched in 2013 by Antoine Porte and Cyril Chiche, Lydia aims to change the way we handle money. Claiming their goal is to “push the boundaries, break down the barriers between us and a cashless society, and to encourage the rise of mobile payments globally”, their app allows users to easily transfer money from their bank account to the Lydia accounts of friends and businesses.
With almost 1 million users in France already (80% aged between 18-30), Lydia is looking to expand to foreign markets, including Ireland, the UK, Spain and Germany. But how secure is loading your phone with all your cash? Hoping to explain how the app works, and their plans for the future, Cyril Chiche and Prita Das meet me for a chat.
Paying for my coffee with loose change, I take a seat and wait for the French co-founder. Personally, I prefer paying with cash, having seen how quickly my bank balance drops when I tap my card. When I withdraw a certain amount every week, at least I know how much is coming in and going out.
Still, fidgeting with my bulky wallet, it’s impossible to deny the possible handiness of having everything on one device. And this is how Chiche describes Lydia:
“Lydia is a mobile payment solution. A mobile wallet. An app that you would download on your phone with which you could link your debit or credit card and bank account. I’m sending you €100, my card get debited €100 and you get €100 in your Lydia account. That is instant, secure and entirely free.”
While your Lydia account is separate from your bank account, Chiche assures me it is super easy and simple to link your bank account to your Lydia account. Once you receive a payment on Lydia, you can transfer this money to your bank account for free.
The other thing you could do is pay businesses with it. Of course, this is limited to businesses that accept Lydia. This could range from doctors to student societies to e-commerce to coffee places. While in France, companies (especially those popular among millennials) have begun to utilise Lydia, in Ireland, Lydia’s website places the burden on the customer:
“You might have an appointment at a hairdresser who has never heard of Lydia when you arrive, and by the time your haircut is over, you’ll be able to pay for it by Lydia. It takes under two minutes to create and activate an account. It’s just up to you to convince them.”
At the mention of e-commerce, PayPal comes to mind. I ask Chiche if (and how) they plan to compete with the tech giant that has been on the scene for almost twenty years:
“In some situations, you can choose to use PayPal or Lydia. There are some main differences, since it’s quite unusual to pay in stores with PayPal. PayPal is of course the dominant player in the ecommerce space, but in the peer-to-peer space, especially among millennials, it’s not that big. Lydia is more on that side of things. Lydia is mobile by design. It’s in the design, whereas PayPal is more from the desktop-laptop era.”
Security
If everything is so simple and easy with Lydia, I can’t help wondering how safe it is. If it’s so easy for me to put money where I want, surely it’s just as easy to take it. At the mention of security, Chiche smiles knowingly:
“Security is a very interesting topic since it’s the first question anyone would ask. The truth is, if I sat with you for a couple of hours and gave you a course on electronic payment security, you wouldn’t be interested in it. You wouldn’t care, and you wouldn’t understand it, because it’s not your domain.”.
Chiche explains that what I (and other users) really want to know is if Lydia can be trusted, not the technical reasons why you should. Commenting that we trust AIB despite knowing next to nothing about banks, he divides “trust in the institution” down into three levels: Card details, app security and the transaction itself.
Card details, he explains, is a core issue. “It’s happened in many situations. Retailers have kept card details, even when they didn’t have the right to; they get hacked and millions of card details are leaked.”
To avoid this, Lydia simply doesn’t store your bank details in their database. Keeping them instead at a central institution with many other retailers, Chiche assures me with confidence that if I’m comfortable letting Amazon store them there, there’s no reason I shouldn’t let Lydia do the same, as it’s the very same process with a central institution.
Secondly is the security of the app itself. Comparing it to the simple 4 digit pin of a credit card, Chiche shows me that as well as their own 4 digit pin, a username, password and even fingerprint ID can all be made necessary before transferring funds.
Finally: the transaction. Complying to European banking regulations, information is regularly sent to the French banks that insure Lydia.
“A lot of information is sent for review every week, every month, every quarter and every year, and again, audited. So we’re very much an audited and regulated entity. The app is secure, and your cards details are secure. So yeah, it’s very secure.”.
Assured, if slightly bewildered, I wonder how they can afford such intricate security if the app is free. Explaining his love for a sleek product and a reluctance for ads, I’m told: “We don’t like Christmas trees with blinking lights all around the front.” Relying instead on fees paid by businesses, and their new Lydia Mastercard subscription (not yet available in Ireland), Lydia is aiming to make itself such an integral part of a millennials’ life that businesses will have no choice but to subscribe to the company, paying their monthly operating cost.
Talking to Chiche, you can tell he really believes in his product and its future. Having spent 2011 to 2013 solely working on the project, he divulges that much of the initial investment came from friends and family: “Sometimes that is even more difficult though, because it’s your friends and family, you’re not going to sell them something you don’t believe in.”
Now though, with almost 40 staff, that small French app company aims to replace the age-old wallet. Integrating loyalty deals (“Imagine at Mama’s Revenge for example, if after every 10 burrito’s purchased, you got an eleventh free”) and QR codes for events and concerts, the app would even replace tickets and loyalty cards.
While Lydia may take its name from an ancient kingdom in Turkey (The kingdom became rich from these coins from electrum, a natural alloy of gold and silver, that was abundant in the river Pactole) it’s clear that it’s founders have eyes for nothing but the future.
Hoping to force their way into the market through peer-to-peer student transactions and society sign-ups, Lydia is already a fast-growing presence in its homeland. Whether it will flourish internationally is yet to be seen.
3.06pm 23/05/2017 This article was updated to clarify a quote.
