The rise of UK shoppers paying for goods with a wave of their mobile phones is set to accelerate after the three largest operators teamed up to launch a mobile commerce venture.
Vodafone, O2 and Everything Everywhere (EE), the parent of Orange and T-Mobile, announced yesterday that they had teamed up to form a partnership – the first of its kind – that would help users abandon their wallets in favour of their mobile phones.
"Wave and pay" technology has dominated the mobile phone industry this year with companies including Nokia and Research in Motion announcing plans to include Near Field Communications (NFC) technology in their new phones. Google then launched its "mobile wallet" to great fanfare in May.
Tom Alexander, the chief executive of EE, said it was a "crucial stage in the development of this technology. The customer expectations are there now".
The "m-commerce platform" will develop the technology behind the mobile wallet and provide a single point of contact for advertisers, marketing partners, retailers and banks to come together to create mobile versions of their products. Ronan Dunne, head of Telefonica UK, said the news could be "a landmark" for the industry. Fred Huet, the managing director of Greenwich Consulting, said that the collaboration of rival operators meant "the jigsaw pieces were being put in place".
The platform is also aiming to attract advertisers, who can use the NFC technology to book marketing space as well as offer coupons, loyalty cards and other deals to people on the move.
Shaun Collins, the founder of CCS Insight, said: "This is a long-overdue co-operation between the operators that means contactless payment has a chance of finally being deployed." He continued: "Up until now it was seen as a good idea but the market place was far too fragmented."
The joint venture will head to Europe for regulatory clearance, which could take up to six months, although the companies are confident they will launch before the end of the year.
They said the venture is open to all industry participants. Yet the fourth operator in the UK market was left fuming yesterday, as it was left out of proceedings. Kevin Russell, the chief executive of Three, said that "directionally, this is a good move on taking m-commerce forward," before adding he was "more than a little concerned, as a core competitor, that we have been excluded from this joint venture."
Earlier this year Orange teamed up with Barclaycard to offer the first commercial contactless payments in the UK. Mr Collins of CCS said that in five years "most people will use their phones to pay for anything under £30".
Mobile ad revenues to soar
The revenues from advertising on mobile phones are set to more than double this year to $3.3bn. Global ad revenues hit $1.6bn in 2010, and research group Gartner predicts that will rise to $20.6bn in four years, driven by the adoption of smartphones and tablets.
This would mark a rise of importance for the market from 0.5 per cent last year to more than 4 per cent of companies' total advertising budgets. The biggest growth is seen in the US and Western Europe, whose combined revenues are expected to account for more than half of those around the world. Gartner researchvice- president Andrew Frank said that in 2011: "We are finally seeing some important drivers fall into place."