The O2 Wallet is the most comprehensive mobile payments service launched to date by an operator in Western markets. And interestingly, although the service is packed full of cool capabilities, such as text-based money transfers, price comparisons and offers, it is not yet enabled for contactless payments. Unlike other players in the nascent mobile payments market, O2 hasn’t chosen to make NFC (near-field communication) the focus of its mobile wallet’s appeal – not like Google Wallet or Quick Tap, the NFC m-wallet service launched last year by rival UK operator Orange. O2 is waiting until NFC handsets and payment terminals are more widely deployed to switch on that capability – but is not banking on it for the success of the wallet.
Currently, it looks more like it’s trying to compete with the Pingit mobile money transfer service that UK bank Barclays launched in February. O2 Wallet is also an evolution of the O2 Money prepaid card launched in 2009 – which is now incorporated into the new service.
Will O2 Wallet be successful? It has a greater chance of success than mobile payment services solely focused on NFC. But O2 faces the same challenges that all other telcos face when competing against so-called over-the-top players – global online companies such as PayPal and Google that have greater geographic reach, brand appeal and agility.
O2 is part of an alliance with other UK operators – Vodafone and Everything Everywhere (Orange and T-Mobile) – to set up a joint m-commerce offering in the UK, to more effectively compete against OTT players. But the alliance has already ran into regulatory resistance, highlighting the difficulties that telcos face in trying to band together without appearing to be anti-competitive.