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Technology / Software

Mastercard and Everything Everywhere enter mobile payments war

Mastercard and Everything Everywhere, the owner of Orange and T-Mobile, have announced their own mobile payment platform, which will focus on NFC (near field communications) initially, before expanding its payment services.

How long until mobiles replace wallets?
How long until mobiles replace physical currency?

Mastercard has already worked with EE on Orange’s quicktap services, and customers, especially youth, have shown interest in using their mobiles as payment devices.

The first product is a pre-pay wallet which will allow users to make small purchases by tapping their mobiles against NFC compatible retail cash registers, but in the future wants to be able to make these in-store payments direct from users bank accounts (and in larger sums), and for person-to-person money transfers.

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"The number of people using ‘tap and go’ payments has increased dramatically, with contactless payments reaching a major milestone of more than one million transactions a month over the last year. Moving forward, finding the key that unlocks the door to mobile will be vital for the future growth of contactless payments," said Marion King, Mastercard’s President of UK & Ireland.

"For mobile payments to become the norm over the next few years, the whole industry needs to understand and embrace the benefits of having banks and retailers develop solutions on a single, interoperable platform."

Mobile payments are projected to go past $171bn in 2012, and the two companies will be hoping that EE’s 27 million strong user base, combined with the 100,000 retailers supporting NFC will see their variant take off – and give them partnership a head start on rivals.

They join an already confused and fragmented mobile payments market which relies on coordination between the hardware manufacturers, the mobile network operators and the payment transaction companies. The NFC standard itself was only finalised in November.

EE rival O2 has launched its own digital wallet, as has Vodafone with Visa.

Alongside these industry initiatives, the various banks, such as Barclays with its Pingit app, have launched their own mobile banking and payment services.

Vertically integrating the hardware, mobile network operator demands and software standardisation and compatibility has proven to be the major problem – which caused Google’s Wallet to stumble at takeoff, Visa Europe’s V.Me was delayed to the end of the year, and O2’s wallet saw months of delays before its release earlier this year.

Top tier devices such as the Samsung Galaxy S3 have included the necessary NFC chipsets, but it has been far from standardised across the industry. Apple announced it will be introducing its own wallet ‘Apple Passbook‘ as part of iOS6 with the iPhone 5 (expected next month), but it is unknown as to whether any Apple devices will include NFC.

Online payment provider Paypal has been focusing on an internet only system using codes, which would skip the need for any new chips whatsoever – especially important as NFC chips and antennas take up room that could be best used for other hardware components.

Hot start ups like Square are already offering retailers the option of using their mobiles as credit card transaction platforms, another popular threat that is already fracturing the market further. Square recently signed up Starbucks.

Further reading:

CBR Feature on mobile payments

Q&A with Sybase365 on mobile payments in enterprise

Q&A with Barclays on its next mobile banking app

Fiserv on the UK banks’ problems with mobile payments

UK company Seatwave on its mobile app for purchasing event and concert tickets

Q&A with the Logic Group on revitalising the high street via mobile payments
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