Preliminary results of the UK’s first m-payments trial, which
included mobile phone operator O2, Barclaycard,  Transport for
London and Visa have been obtained by CI and show there was broad
support among consumers for the product. The partners are now
considering their next move. William Cain reports.

Two-thirds of the participants in the UK’s first m-payments trial
said the ability to make payments with mobile phones would
influence their choice of handset, Cards International has

The trial, carried out by partners Visa, O2, Transport for
London (TfL) and Barclaycard, finished recently but official
results are not due to be released for another month.

However, a source close to the project told CI there was
broad-based support for the product from consumers who used the
technology to make payments with their mobile phone between
November 2007 and June 2008.

The two-thirds figure, obtained from 225 participants, was
considered a successful result by the partners. Partners will now
consider whether to introduce the product into the wider market or
begin a larger scale trial. Further details on the trial are to be
released over the next month.

Around 500 consumers in the trial were given a Nokia handset
installed with near-field-communications (NFC), a short range
wireless technology which enables communication between electronic

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Only 225 were given the Barclaycard/Visa functionality, which
allowed mobile payments. In the first phase of the trial, between
November and February, the 225 consumers were given a Barclaycard
Visa prepaid card loaded onto their handset, enabling them to use
it to make cashless payments under £10 ($20) at retail outlets
which accept the technology across London.

Mobile phones could also be used to pay for journeys on London’s
public transport system, run by TfL. The mobile devices could be
tapped against TfL’s Oyster prepaid card readers at entry and exit
points on buses and in train stations.

Extra functionality

The second phase of the trial was scheduled to
include extra functions like PIN capability for transactions,
purchases above £10 and reloadable and credit funds to be made
available. The remaining 275 participants used the NFC product for
travel on London’s public transport system.

While it is known the NFC technology and mobile payments software
works – it has been deployed in numerous other countries – the
trial was designed to gauge customers’ levels of interest in the

There are concerns from some in the industry about how popular the
product will prove to be in the UK, particularly outside London,
where the benefits of high speed, high volume payments are less

Those issues are seen as particular concerns with contactless card
technology, although with mobile phone payments there are added
elements to the proposition, like combining the service with
m-banking and bill payment facilities.

Mobile operators move in

Mobile operators like O2 are in a position to become
far more influential players in the payments industry if mobile
payment in Europe takes off in the same way as in Japan and South
Korea, which have been early leaders in the mobile space.

By taking control of the medium for payments – cards are issued by
banks, whereas handsets are issued by mobile operators – telecoms
are in a strong bargaining position when it comes to establishing
the division of profits through m-payments and banking

Former head of NFC at O2 Mary Carol Harris, now heading up Visa
Europe’s mobile department, told CI earlier this year (CI 394) one
of the potential methods of dividing up the revenue was a model in
which the telecoms charged banks rent to carry the payment
application on a customers’ SIM card.

Another method is for a telecom business to buy a stake in a bank
or consumer finance business, as happened in Japan.

Mobile operator DoCoMo, one of the global leaders in mobile
payments and banking, bought a 34 percent stake in Sumitomo Mitsui
Card, a domestic credit card issuer, in order to establish its
presence in the mobile payments market – where it also offers
credit services.

DoCoMo said in June it had signed up 28.5 million subscribers to
its Osaifu-Keitai (mobile phones with m-payment functions),
launched in Japan in July 2004. It can be used to pay for goods and
services in 680,000 retail outlets.