Vodafone to launch UK mobile payments!

Vodafone will launch a mobile wallet service in the UK next month into a market set to be shaken up by Apple’s plans for a payments platform.

The British mobile group has developed its own service with Visa that will work with a special SIM card embedded with NFC (near field communication) technology that can be used to swipe for payments at contactless tills.

Vodafone is working with third-party loyalty card companies such as Nectar, and will open up the technology to banks to use with their own payment services. The Vodafone wallet can also be used to pay for travel on London Underground, and will allow person-to-person payments between customers.

Vodafone is planning a consumer launch later this year for the service. But it will probably be beaten to the market by Apple, which is expected to integrate mobile payments into its forthcoming range of iPhones, due to be unveiled this week. Vodafone’s mobile application will only be available on Android smartphones.

“The pieces are falling into place,” said Alix Pryde, head of innovation at Vodafone UK. “There are now the devices, the contactless payments and increasingly the consumer behaviour to make this a success.”

The group has already launched similar services in Italy, Germany, Spain and the Netherlands. It said that the take-up had met its expectations so far.

Mobile operators are competing with technology companies as well as financial services groups to take the lead in mobile payments as more people become reliant on smartphones for a range of lifestyle services.

They can offer a level of security through their ownership of the SIM card, where the customer’s personal information and card details can be stored securely. But banks have a brand loyalty around payments that no mobile operator can match, while Apple’s solution is expected to use a secure chip and will be able to interact with customers through iTunes.

Vodafone customers will need to replace existing SIMs for NFC-enabled versions and have a compatible handset. Mark Ritzmann, head of m-commerce, said usage would be restricted to payments below £25 for regulatory reasons, although he added that the company hoped to introduce a PIN-protected way to make larger payments in time. “It will start to replace the leather wallet,” he added.

Vodafone said that more than 300,000 terminals had so far been enabled for Visa contactless payments, a 67 per cent increase over last year, while there were about 111m contactless purchases in the UK in the 12 months to February 2014.