Last week’s entry by Telefónica O2 Ireland into the financial services market, with the launch of its O2 Money cash card for consumers, is really a clever dress rehearsal for a future where mobile operators will hold the key to your wallet. Literally.
The O2 Money card, developed in partnership with Visa Europe, Payzone and 3V, is available to purchase in O2 stores by customers of any Irish mobile operator who are over 18 years of age. People can top up anything from €20 to €350 per day onto their card which, because it operates on the Visa platform, can be used almost anywhere that accepts electronic Visa payments.
It may take consumers a while to get used to seeing a mobile operator offer such services on the high street, but in the year ahead a major transformation is set to occur where smartphone devices will, in effect, hold virtual versions of all your bank and credit cards so you can pay for your goods wirelessly.
In the UK, Barclaycard, for instance, is offering contactless cards that allow users to pay for items wirelessly via their card by just waving it near a reader device.
However, mobile devices are already coming on the scene where they will have a technology inside them called near field communications (NFC) and this will let their phones do exactly the same thing. The latest Google Nexus S smartphone features this technology, plus the forthcoming iPhone 5 will also have it.
E-wallets coming up fast
People have been talking about NFC as if it was a futuristic technology that won’t appear for years, but if you ask Stephen Shurrock, who has taken over the role of CEO of O2 in Ireland from Danuta Gray, NFC and electronic wallets will happen sooner than you think.
Shurrock said that O2 Ireland’s parent company Telefónica has conducted a trial of NFC with more than 1,500 people in Barcelona.
I put it to him that with contactless payments coming to the Irish market, the new money service prepares the mobile operator to be an integral player in the e-wallet space.
"In terms of NFC, our trials in Barcelona of the technology, where we’ve worked with a number of merchants, lead us to believe this will be a substantial opportunity.
"I believe we will see NFC sooner than you think – possibly in the next 12 months – but of course the rollout will be selective, based on markets that are ready to receive it.
"The big tipping point for NFC will come with merchants. Once they have the reader technology it will have a snowball effect. It will come quicker than you think," Shurrock said.
"I do see the mobile phone and the wallet coming together and envisage e-wallets becoming commonplace in time."
Individual cash control
Returning to the new O2 card launched last week, Shurrock said people can only spend what’s on the card so they will be in complete control of their money. O2’s own research has found that 82pc of consumers believe a prepay money card would help them avoid getting into debt.
On the challenges facing mobile operators, Shurrock said he sees Ireland as a tough market. "No question about it. There are four networks and four MVNOs (mobile virtual network operators) and the challenge is to save money and at the same time be relevant to customers and part of their lives.
"Another big challenge is there’s a huge data wave hitting us at the moment, and customers are consuming more data via smartphones and tablet computers. This data wave is a huge opportunity for the industry. Customers want Facebook and the internet when they’re out and about and this is more of an opportunity than a challenge. Tablet computers in particular are carving an interesting segment."
On the horizon is the next evolution of mobile – 4G or long term evolution (LTE) – and Shurrock said that soon LTE auctions will be a big topic for debate in Europe.
“On one hand you have operators investing hundreds of millions into the marketplace and on the other side you have to bring customers on the journey and have an economic business case as things move forward.
“This will be both a serious challenge and a balancing act,” he warned.
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