In the UK, all three major carriers have launched or are planning to launch their own mobile payments initiatives:
1) O2 will introduce its own Visa-branded prepaid payment applications on its NFC phones later this year.
2) Orange UK, part of Everything Everywhere, launched its Quick Tap FNC payment service with UK issuer and acquirer Barclaycard in May of this year.
3) Vodafone UK is planning to enter the space but has not yet revealed its plans.
At the same time, they also plan a joint venture to provide a "one-stop shop" for mobile advertising, payment, ticketing and other services in the planned NFC mobile wallet they will be launching next year. To make this a reality, the operators plan to invest together between $16 and $80 million – depending on how well the initiative is received – to develop the technology and market it to retailers.
This UK NFC joint venture (no name or logo has yet been published) has been built in a near exact model as it’s US cousin, Isis:
1) The three carriers hold an equal state.
2) The joint venture will deploy and manage advertising and loyalty programs.
3) It will also act as its own trusted service manager, which would give them the necessary control to keep competition – other carriers or other wallet solutions – out of the majority of the UK market since, together, they control around 90% of the UK market.
In the words’ of the partners:
"This will enable consumers to transfer their entire physical wallet into a new secure, SIM-based wallet regardless of which NFC enabled mobile device, or mobile network they are using," say the partners. "Companies and organisations that provide anything from credit, debit and loyalty cards to membership cards and transport tickets will be able to create secure mobile versions of their products. Consumers will be able to use their mobiles to pay for goods, services and travel using contactless technology (NFC) with one touch of their phone, or online via mobile or PC."
The new business will provide a single contact point for advertisers, media agencies and retailers looking to reach consumers on their mobile phones. The joint venture company (JV) "will enable them to book advertising space and create campaigns as well as provide offers, coupons and loyalty cards which can be stored on the phone and redeemed in shops. For consumers, the JV means that they will be able to receive discounts and offers from brands that are relevant to them and that they want to receive."
Everything Everywhere, Telefónica and Vodafone will also "continue to develop their own competing products and services tailored to their own customers, which will be based on the open platform infrastructure provided by the JV."
Although the partnership will certainly speed up development and adoption, it also raises issues around competition. Specifically, on September 7th, Three UK asked the European Commission to block the joint venture. Mr. Lerner, Three UK regulatory affairs director, expressed his concern that, given their size, the partners could impose high transaction fees on consumers and set a difficult precedent in Europe.
It needs to be noted that Three UK, the fourth largest wireless provider in the UK with 6.9% of the country’s subscribers, was not included in the agreement. It may have been because its profile differs from that of the main provider: It is an aggressive, low-cost seller of phone and Internet services and a relatively new competitor in the UK (launched in 2003).
And indeed, this is an important battle both for the future of NFC payments in the UK as well as across Europe. Wireless carriers are developing similar initiatives in, among other countries, Denmark, Hungary, the Netherlands and Germany – in this case the telcos would by-pass card networks and banks using their own banking or e-money license. A thumbs-up or thumbs-down decision from the European Commission would be a very strong signal to the providers in each of these countries.
1) O2 will introduce its own Visa-branded prepaid payment applications on its NFC phones later this year.
2) Orange UK, part of Everything Everywhere, launched its Quick Tap FNC payment service with UK issuer and acquirer Barclaycard in May of this year.
3) Vodafone UK is planning to enter the space but has not yet revealed its plans.
At the same time, they also plan a joint venture to provide a "one-stop shop" for mobile advertising, payment, ticketing and other services in the planned NFC mobile wallet they will be launching next year. To make this a reality, the operators plan to invest together between $16 and $80 million – depending on how well the initiative is received – to develop the technology and market it to retailers.
This UK NFC joint venture (no name or logo has yet been published) has been built in a near exact model as it’s US cousin, Isis:
1) The three carriers hold an equal state.
2) The joint venture will deploy and manage advertising and loyalty programs.
3) It will also act as its own trusted service manager, which would give them the necessary control to keep competition – other carriers or other wallet solutions – out of the majority of the UK market since, together, they control around 90% of the UK market.
In the words’ of the partners:
"This will enable consumers to transfer their entire physical wallet into a new secure, SIM-based wallet regardless of which NFC enabled mobile device, or mobile network they are using," say the partners. "Companies and organisations that provide anything from credit, debit and loyalty cards to membership cards and transport tickets will be able to create secure mobile versions of their products. Consumers will be able to use their mobiles to pay for goods, services and travel using contactless technology (NFC) with one touch of their phone, or online via mobile or PC."
The new business will provide a single contact point for advertisers, media agencies and retailers looking to reach consumers on their mobile phones. The joint venture company (JV) "will enable them to book advertising space and create campaigns as well as provide offers, coupons and loyalty cards which can be stored on the phone and redeemed in shops. For consumers, the JV means that they will be able to receive discounts and offers from brands that are relevant to them and that they want to receive."
Everything Everywhere, Telefónica and Vodafone will also "continue to develop their own competing products and services tailored to their own customers, which will be based on the open platform infrastructure provided by the JV."
Although the partnership will certainly speed up development and adoption, it also raises issues around competition. Specifically, on September 7th, Three UK asked the European Commission to block the joint venture. Mr. Lerner, Three UK regulatory affairs director, expressed his concern that, given their size, the partners could impose high transaction fees on consumers and set a difficult precedent in Europe.
It needs to be noted that Three UK, the fourth largest wireless provider in the UK with 6.9% of the country’s subscribers, was not included in the agreement. It may have been because its profile differs from that of the main provider: It is an aggressive, low-cost seller of phone and Internet services and a relatively new competitor in the UK (launched in 2003).
And indeed, this is an important battle both for the future of NFC payments in the UK as well as across Europe. Wireless carriers are developing similar initiatives in, among other countries, Denmark, Hungary, the Netherlands and Germany – in this case the telcos would by-pass card networks and banks using their own banking or e-money license. A thumbs-up or thumbs-down decision from the European Commission would be a very strong signal to the providers in each of these countries.
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