O2 urges stores to back 'electronic wallet' handset after trial success

Mobile phone handsets that double as electronic swipe-and-go travelcards, credit cards, and even supermarket loyalty cards, could hit the high street within the next few years.

But O2, the mobile operator pioneering the necessary "near field communications" (NFC) technology in the UK, is looking to major retailers to give the scheme the mass market appeal that it needs.

Following the group's successful 500-strong trial of prototype Nokia handsets, O2 is setting up an NFC taskforce to bring together technology providers, banks and retailers to overcome the barriers to a commercial launch. Barclaycard and Visa were both part of the London trial, but O2 wants to get American Express and Mastercard involved as well, and it is already talking to two of the biggest high-street banks. But the retailers are the crucial link in the chain.

"In the UK there are two or three major retailers and if they would get involved it would have a dramatic impact," Claire Maslen, head of NFC at O2 UK, said. "If Tesco came on board, imagine the difference it would make."

The London trial, which ran from November to May, allowed participants to use their handset as an Oyster travelcard on London transport systems, enabled them to pay for low-value goods on credit by simply tapping the handset on a console in participating shops, and gave them access to targeted marketing information in tagged "smart posters".

Nine out of ten participants in the trial were happy using the technology, more than three-quarters said they would be interested in the NFC service if it was commercially available, and 87 per cent said the availability of such services would influence their purchase of a new phone.

The Oyster card function was particularly popular, with 89 per cent of triallists wanting to keep it. More than two-thirds wanted to keep the payWave feature. The biggest drawbacks were that there was no choice of handset, and that only a small number of retailers are currently equipped for contactless payments – whether with a phone or a standard bank card.

Ultimately an NFC scheme could incorporate any number of functions. "Loyalty card, gym card, building access card, those annoying cards from coffee shops that you always lose – if we could build all that into a single electronic wallet it would be something people really want to use," Ms Maslen said.