UK operators get green light to join forces on ‘Project Oscar’ contactless payment and wallet offering

Mobile operators Everything Everywhere, O2 and Vodafone have been given the go ahead by European regulators to develop a digital wallet currently going under the name of ‘Project Oscar’.

The new m-commerce service will allow customers to make contactless payments with their smartphones in retail outlets, rather than using cash or cards and goes up against projects being run by Barclaycard, Visa, Paypal and Google.

Hutchison Whampoa-owned Three may join the partnership at a later date and has welcomed news of the European Commission’s approval, although it initially expressed concern that Project Oscar was anti-competitive.

In a statement the partners said: “It will give consumers a simple and secure shopping experience, allowing them to purchase goods and services using their handsets in physical locations such as shops, using contactless technology, as well as online.”

The service will be designed to make it easier for retailers to offer discounts and other incentives to consumers, without the need to issue paper vouchers or account cards, and to launch marketing campaigns.

Vodafone, O2 and Everything Everywhere plan to create a new company to develop the service and will launch a recruitment campaign for staff.

There are already a number of similar services available, although the m-commerce market is still relatively young and developing rapidly. Earlier this year Barclays launched its Pingit service, a smartphone app which allows mobile users to send money from their handset. Google has launched its ‘Wallet’ smartphone app, and recently added an ID feature to the service.

The new feature will allow ID documents such as driving licences to be displayed on a phone, a development which could see traditional wallets become obsolete.

Visa Europe is launching its V.me digital wallet in the UK.

The three participating operators said the plan would make it easier for retailers and others to offer discounts and other incentives without the need to issue paper coupons or plastic account cards.

The firms had originally hoped to have the service running in time for the London Olympics, but the EU had wanted to check it would not hinder competition.

One industry watcher told the BBC that the mobile operators’ success was not guaranteed since a wide range of other companies involved in financial services and the mobile device industry had shown interest in the area.

“The market is still very much wide open,” Windsor Holden, research director at the analysts Juniper Research told the BBC. “While we have a number of mobile wallet solutions now being deployed, as far as adoption goes it is still a nascent market.

“The level of awareness about the various options is still low. What is absolutely critical is educating the public that phones can be used in this way, and the winner will be the businesses who succeed in doing this and convincing both shoppers and vendors that it is easy to use.”

Vodafone, O2 and Everything Everywhere have said they intended to create a new company and begin hiring staff “as quickly as possible”, but did not issue a target date by which they hoped to launch a product.

The service, which is currently available in beta to an initial group of consumers, can be accessed through the internet browser on a PC, laptop, tablet or smartphone.