Vodafone enters the M-Payment fray

Wednesday 4 December 2013 | 12:21 CET | Background

Vodafone Group will launch a set of mobile payment services, including an NFC powered mobile wallet in 2014. These services are likely to go head to head with similar bank-branded services and third-party apps.

Spain is the first market where SmartPass was launched. The service will be launched in Germany in mid-December and expanded to the Netherlands, UK and Italy in spring 2014. The service will initially be confined to NFC-capable smartphones from Samsung, Sony and HTC, with plans to expand the range.

Vodafone will offer a SIM card with Secure Element that holds the Wallet app. The Vodafone Wallet app can also hold travel cards, library or gym membership cards, loyalty cards, gift cards and vouchers, the aim being to eventually replace plastic cards.

The first payment app available for the Wallet is Vodafone SmartPass, developed in partnership with card scheme Visa. SmartPass is a Visa World credit card, which can be linked to any banking account. The app uses prepaid funds to enable customers to pay for goods with their smartphone at any Visa contactless payment terminal.

Wirecard is supporting Vodafone as a technical service provider implementing the mobile payment application for various mobile phone types. Wirecard is also responsible for the creation, implementation and operations of all technical processes. Wirecard will also provide NFC tags for mobile phone models which are not NFC-enabled.

Banking services

However in the Netherlands, the largest retail banks will launch their own services. Rabobank has announced an NFC payment service based on a platform supplied by Giesecke & Devriendt. The other large banks have not made firm announcements, but are generally expected to follow the same path.

Technically speaking this will work. All deployments will be based on the interoperability standards as defined by GlobalPlatform. This means that both the operator TSM and the service-provider TSM will be able to access the same SIM card and provision contactless cards.

While the technology is the same, the services seem to go head to head. The Bank will offer to load the debit card into mobile phone and use it for a set of bank branded mobile payment services. The mobile operator will launch a functionally identical set of mobile payment services, (for the time being at least) linked to a separate payment service.

Vodafone says it’s also working with major European banks to integrate their card portfolios into the wallet. The Vodafone branded payment services will face competition from banks that offer contactless debit cards to their customers, and from strong OTT players. It remains to be seen whether the Vodafone proposition is strong enough in its present form.

Dutch consumers are used to paying with their bankk's debit card. A prepaid Visa credit card in combination with a limited acceptance infrastructure is not going to win many hearts in the Netherlands.

Vodafone 360

It is not the first time Vodafone has launched its own content services to compete with OTT providers. Early in 2009, in the pre iPhone era, Vodafone launched its own application manager (the word app store was not commonplace) for apps and content services, branded Vizzavi. In 2009 it launched Vodafone 360 which included navigation services and DRM protected music. The service struggled for two years before it was killed in 2011. By then the hand set app stores and third-party apps had taken over.

M-commerce could go the same way. On the other hand, Vodafone may succeed in its aim to keep the SIM card as the central infrastructure. Even if the Vodafone services do not catch on, renting out the SIM card will bring in some additional revenue.

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