O2 rolls out new digital wallet

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O2 has released its new digital wallet in the UK that will allow customers to send and receive money, compare prices and shop using a mobile phone.

The O2 Wallet enables consumers, including non-O2 phone subscribers; to transfer up to £500 to any UK mobile phone number as easily as sending a text.

Customers can also use the O2 Wallet when shopping through the use of a comprehensive barcode and search engine function that compares the prices of millions of branded goods from more than 100 online retailers. In addition, consumers will have access to unique daily discounts and deals from retailers such as M&S, Debenhams, Comet, Sainsbury’s, Tesco Direct and Clarks.

O2 allows customers to use their phone as a wallet to digitise their existing debit and credit cards. Money can be loaded into the O2 Wallet account via a debit cards, by receiving a money message or with cash at an O2 store, PayPoint or epay retail outlet. O2 Wallet’s transaction history helps consumers to monitor their expenditure with texts alerts when the account balance changes; a 30 day payment history on the application; and a 12 month history online.

James Le Brocq, managing director at O2 Money, said the O2 Wallet would transform the way people manage their finances and spend money. ‘O2 Wallet delivers the benefits of mobile money to more UK consumers than any other product or service currently available. With O2 Wallet, it’s easier to transfer money, track expenditure and pay swiftly and securely, all using your mobile.’

The number of consumers who use their mobile phone to manage their money is steadily rising. In 2011, the proportion of people using mobile banking increased from 9.7% to 20.4%. Meanwhile, shopping on mobile devices is set to increase by 53% in the next 12 months, hitting £4.5 billion and making British consumers the biggest mobile shoppers in Europe, according to O2.

Eden Zoller, principal analyst at Ovum, said the O2 mobile wallet service was one of the most comprehensive services of its kind to be launched by a European mobile operator. ‘It features money transfers, price comparisons, offers and promotions, the ability to link existing Visa and MasterCard credit/debit cards to the O2 Wallet account along with prepaid options,’ Zoller said.

However, Zoller said a notable omission was the lack of support for NFC, making the service essentially a mobile web and online proposition. In the future, O2 plans to incorporate NFC technology and enable contactless payments direct from the handset to top-up mobile airtime, buy train tickets and make mobile contactless payments.

Zoller warned there could also be challenges going forward regarding the positioning of O2 Wallet alongside the collaborative mobile payments service that O2 is planning with Vodafone and Everything Everywhere in the UK. The venture is currently being investigated by the European Commission on potential anti-trust grounds.

Le Brocq cited security as absolutely essential to the success of the O2 Wallet. ‘O2 Wallet has been trialled internally for months and has undergone extensive stress-testing’ with security experts. In additional to PINs and passwords, all personal details and financial data are held on remote central servers rather than on the mobile device itself. This, we believe, is the safest and most secure way to deliver mobile payment services.’

O2 Wallet offers both a physical and a virtual O2 Money Account Card. The virtual O2 Money Visa Account Card is used for online shopping. Consumers can also apply for the physical O2 Money Visa Account Card to pay for things on the high street or withdraw cash from ATMs. Both are based on a Visa prepaid account so that customers can manage their finances.

Sandra Alzetta, senior vice president of Mobile at Visa Europe, said the new service created an easy and efficient online payment experience for mobile device users, as well as encouraging contactless payments among those users who choose to take a physical card. ‘This announcement is another step towards an integrated future where the way we pay reflects the full potential of these new technologies,’ Alzetta said.