Eighteen months after launching its Mobile Wallet service, O2 is informing its subscribers that it will cease the service at the end of March. We have been rather sceptical of the efforts of Mobile Operators to build a successful mobile payments business in developed economies where competition is fierce (FinancialServicesViews subscribers can see our review on Mobile Banking, here) and the fact that O2 are withdrawing this service without announcing an immediate replacement reinforces this view.
Nevertheless, Telefonica (O2’s parent) made the strategic decision in July of last year to build a partnership with Monitise to develop mobile payments and commerce platforms, see here. (The outgoing wallet pre-dated this agreement). We should probably expect a new wallet and other m-commerce propositions later in the year which will leverage Telefonica’s scale and international reach as well as Monitise’s Mobile Money solutions and wider payments ecosystem.
Over the next twelve months we can expect a host of new mobile payments and m-commerce services from an array of vendors as smartphone penetration grows and as Financial Services companies and retailers use the mobile channel to offer more personalised services. Usage levels are certain to increase but we should also expect that a large proportion of these offerings will “crash and burn” as companies compete for the valuable real estate that is your smartphone’s screen.