An announcement on the proposals for a ‘mobile wallet’ is due from the European Commission tomorrow, but sources close to the process say it is likely to be subject to further scrutiny.
The Commission has the option to pass, reject or further scrutinise the joint plan from O2, Everything Everywhere, who own T-Mobile and Orange, and Vodafone. A number of sources admitted privately that nobody now believed the proposals would be waved through, as was hoped originally. The plans have already been delayed twice, forcing the firms to miss their ambition to have the system up and running by the London 2012 Olympics.
The companies are seeking to form a new, separate business that would build a mobile payments platform which could also be used by others businesses. Concerns raised by smaller mobile operator Three, which was not included, are not thought, however, to be the basis for the European Commission’s expected decision to examine the proposals further.
Using mobile phones for payments is becoming a major focus for mobile phone companies and banks. Barclays has today also announced that its PingIt payments app is now available for all bank accounts, while Orange's Quick Tap application is also going to available for a range of new Android handsets in the near future.
Operators said at the time of their application for mergers approval in March, “If approved, the joint venture will benefit UK plc as a whole.” They claimed it would “promote competition by bringing together the necessary scale to offer a credible alternative to the established online payments and advertising platforms offered by large US-based internet players".
Users would be able to store details of their existing credit, debit or store cards on their phones and pay for goods and services via ‘contactless ‘near-field communications’ technology. They would also be able to receive coupons and loyalty rewards, sometimes in exchange for sharing information.
Similar projects are being looked at across Europe, but the EC will make a separate decision on each proposal.
Announced last summer, the proposals are a challenge to plans from Google, called Google Wallet, that are already in use in America. Apple is rumoured to be looking at extending NFC technology into its mobile phones, which are already often linked to an iTunes account, which contains details of credit cards.
Project Oscar’s backers claim that their wallet technology would be open to any bank or ‘virtual’ mobile network such as Virgin or Tesco. The basis on which it is offered would, however, depend on the scale of each network.
A source close to the process said that the European Commission’s Competition Directorate was likely to want to examine the proposals further largely because “the entire mobile phone payments market is still so embryonic”. Although it had been hoped that services would be up and running by summer, the new delay could be up to six months. The Commission is not expected to reject the entire proposal, and is likely to focus its further investigations on which ‘wallets’ can be stored on a phone.
Jerry Mulle of analysts Intelligent Environments said that "while this joint venture is a positive step, there are many more players involved in the mobile payments space, including banks, other mobile network operators, retailers and handset manufacturers. Without a common set of protocols and standards across the entire industry, mobile payments will not go mainstream.”
