O2UK launches mobile wallet service

Telefónica subsidiary O2 has become the first operator in the UK market to launch a mobile wallet offering. The service offers price comparison for online shopping, person to person money transfer and allows the user to digitise cards linked to existing bank accounts, or load money onto an O2 stored value account.

The service is available as an app for iOS, Android and RIM devices but has not been optimised for the iPad, and is not available for Windows Phone. Mobile and desktop web versions of the service are also on offer. James Le Brocq, managing director of O2 Money said that the absence of a WP version of the app was  a resource issue and that there was “finite capital” available for development.

Le Brocq categorised the service as “e-commerce on a mobile”, with O2 planning to deploy a contactless payment element to the service at some point in the future.

O2 is establishing partnerships with the UK’s top 120 online retailers (with offers from four available at launch) and will charge those retailers a per transaction fee, a strategy that Fred Huet of Greenwhich Consulting described as “cleverly devised”.

P2P money transfer will be free for an initial six-month period but O2 is considering a £0.15 transaction fee thereafter. The solution allows users to share details of P2P transactions on social networking sites, which Le Brocq suggested would help drive awareness and uptake of the service.

This will be crucial in helping O2 meet one of its goals for the service, which is to drive uptake among users of competitor mobile networks. O2 has stolen a march on the other UK operators, as their proposed mobile money joint venture, Project Oscar, undergoes an “in-depth” investigation by the EC over possible contravention of merger regulations.

Earlier this month the EC said that its initial investigation “revealed that the joint venture and its three parent companies [O2, Everything Everywhere and Vodafone] may have the technical and commercial ability and incentive to block future competitors from offering their own mobile wallet services to customers in the UK, or to degrade the quality of these competing mobile wallets so that they become less attractive.”

Asked about this at the launch of O2 Wallet, Le Brocq dismissed the possibility that the EC’s investigation might prove to be a significant obstacle for Oscar, and said that the project was simply “awaiting approval”. He said that O2’s Wallet did not reflect any internal concern about Oscar’s realisation.

But Ovum analyst Eden Zoller suggested that O2’s early move into the space while its JV remains side-lined by regulatory investigation might create difficulties. “There could be challenges going forward in terms of positioning O2 Wallet alongside the collaborative mobile payments service that O2 is planning with Vodafone and Everything Everywhere,” she said.