April 19, 2012, 5:32 PM

U.K. mobile payment joint venture catches the attention of an EU watchdog

An investigation could halt plans by three U.K. telecoms to introduce a mobile wallet.

Lead Photo

The European Union is investigating a potential joint venture by three major U.K. telecommunications companies to create a mobile wallet. EU regulators say the joint venture may create a monopoly as the three firms reportedly represent more than 90% of U.K. mobile subscribers—and three of the four mobile operators in the U.K.

The operators: Telefónica, Vodafone and Everything Everywhere announced in June 2011 their plan to create a mobile wallet that will enable consumers to make payments by waving their smartphones near checkout counter readers equipped with Near Field Communication, or NFC, technology. 

A mobile wallet is a smartphone-based account that connects to a consumer’s credit card or checking account and is used in stores to pay for merchandise. NFC technology in smartphones and payment terminals communicate wirelessly to complete a transaction. The joint venture, if approved, would provide various mobile commerce services to businesses, including mobile payment transaction services, mobile marketing services and associated data analytics services.

The three telecommunications companies together may “have the technical and commercial ability and incentive to block future competitors from offering their own mobile wallet services to customers in the U.K., or to degrade the quality of these competing mobile wallets so that they become less attractive, ” according to a written statement from the European Commission.

“The Commission is in favor of any initiative that will develop the promising mobile commerce sector in Europe and bring new and innovative payment and interactive advertising experience to consumers,” Joaquín Almunia, commission vice president, competition policy, said in a statement. “At the same time, we need to make sure that competing services can keep emerging on this market, so that incentives to innovate remain and customers get the best mobile commerce services at the best cost."

The investigation was spurred after 3UK, the smallest of the four mobile carriers in the U.K. and the only one left out of the joint venture, asked the EU competition watchdog to look into the plan. The commission now has 90 working days to reach a decision. The investigation follows an attempt by several Dutch banks and telecommunication companies including Vodafone Netherlands and banks ABN Amro and ING to launch a similar mobile payment initiative, according to press reports. That project, called Travik, has been delayed pending EU regulatory approval.

Even if the three firms get the go-ahead for their mobile wallet, U.K. consumers might not be ready to embrace it.  24% of U.K. adults say using their smartphone to pay for goods in stores feels less secure than other payment mechanisms, according to a recent study of 1,000 Britons by Intersperience, a research and consulting firm specializing in consumer behavior.

44% of survey respondents say a lack of security software for smartphones will keep them from using a mobile wallet. 24% of respondents worry that their mobile phone is more likely to be stolen than their wallet. Only 17% say they want to use their mobile phone as a wallet in the future.

The study looked at consumers’ willingness to conduct transactions via PC and via mobile and found that while 11% would hesitate to make a purchase via PC, 37% would hesitate to use a mobile phone to buy something. 8% of adults use their mobile phones to buy goods, and 21% say they would like to engage in mobile commerce in the future.

comments powered by Disqus

Advertisement

Advertisement

Advertisement

From IR Blogs

FPO

Jacques van der Wilt / E-Commerce

How to quickly improve your ROI on Google Shopping

Don’t just track category ROI. Look at ROI by product to maximize profits. Just one ...

FPO

Adrien Henni / E-Commerce

Alibaba tops e-commerce sites in Russia as well as China

AliExpress, the Alibaba site that lets international shoppers buy from Chinese merchants, leads in traffic ...

Advertisement