O2 creates a stir with its Mobile Wallet offering

Rating: Should help boost contactless payments

O2′s announcement (here) of the O2 Mobile Wallet in the UK has created quite a stir within the UK. O2’s service will not only facilitate money transfers but also contactless payments in the near future. As Fred Huet, md with Greenwich Consulting points out, “The fact that so many high-street retailers have signed up already means that it is likely to get some strong traction, as consumers get used to paying for goods via mobile.” The announcement has also generated a flurry of stats, including one survey from YouGov conducted online on behalf of Intelligent Environments (IE). According to James Richards, Director of Mobile, Intelligent Environments, “Consumer appetite to use the ever-ubiquitous mobile device to make payments and manage money is alive and kicking.” Which is good news considering all the scaremongering over mobile payments’ security.Huet points out, “As the first mobile operator to enter the mobile payments race with its own wallet, O2 has the advantage over its competition, and it will be interesting to see whether others follow suit.”

O2 backed up the Wallet announcement with some interesting stats. The proportion of people using mobile banking increased from 9.7 per cent in 2010 to 20.4 per cent in 2011, according to TNS Mobile Life [2011].

Meanwhile, the Kelkoo & Centre for Retail Research found that whilst shopping on mobile devices is set to increase by 53 per cent in the next 12 months hitting £4.5 billion, Brits are set to become the biggest mobile shoppers in Europe.

YouGov also discovered that the appetite for mobile payments in the UK is strong with 29 per cent of British mobile owners keen to use their mobile more than cash or cards to pay for goods or services less than £20 if their phone had the capability..

“O2 has also cleverly devised a new way of monetising the service initially charging retailers a transaction fee. With further plans to charge consumers 15 pence per money message sent by text this will not only net more revenues from messaging but could also cut down on the amount paid by merchants,” Fred Huet observed.

According to YouGov, if their smartphone had the capability, 49 per cent of smartphone owners would be interested in swiping their phone to make a payment in-store.

This figure rises to 61 per cent of iPhone owners, but falls to 47 per cent of Android and 39 per cent of BlackBerry owners who would like to swipe their phone to make a payment in-store.

The poll also found that iPhone users are most inclined to use their phone as a wallet with 60 per cent saying that they would like to manage their bank account (average 42 per cent), shop online (58 per cent vs. 41 per cent), pay for a travel ticket (46 per cent versus 30 per cent), or pay a friend or relative (29 per cent versus 21 per cent) using their mobile phone.

The desire to use a mobile phone as a wallet was less fervent amongst females and Blackberry smartphone users, with 33 per cent and 35 per cent respectively who would use mobile payments more than cash or card to pay for goods or services worth less than £20.