Breaking News – U.K.’s O2 Wallet Shuts Down after 18 Months (Jan. 9, 2014)
O2 Wallet, which made a splash when it launched in April 2012 as the U.K.’s first mobile wallet, is shutting down after just 18 months. O2 is no longer accepting new customers, and existing account holders must remove funds from their wallets by March 31, when O2 Wallet will suspend services, the mobile network operator announced today on its Website.
O2 Wallet, a Paybefore Awards Europe winner in 2013, was popular with some customers, particularly for its feature enabling P2P money transfers using only a recipient’s mobile telephone number plus its secure online shopping options and tools to track and manage spending. The service also offered mobile top-up and a companion prepaid Visa card for online and POS purchases. Though O2 originally talked about adding NFC payments, that feature never materialized. U.K. merchants, including Debenhams, Comet, Sainsbury’s Direct and Tesco Direct, also offered discounts to account holders.
“When we launched O2 Wallet 18 months ago, we were one of the first mobile wallets around. Since then lots has changed for us, the market and our customers,” O2 said on its Website today. The mobile operator later added in a series of Tweets: “Our decision was based on customer insight. O2 wasn’t a failure. We remain committed to financial services across Telefónica.”
Analyst suggest a key reason for O2 Wallet’s demise is the brand’s participation in other new mobile wallet projects, including Weve, the mobile wallet joint venture announced last year with O2, Vodafone UK and Everything Everywhere. Weve is expected to launch the first phase of its services, a mobile loyalty app, early this year. A broad U.K.-based mobile wallet service also is in the works, though no details or timeline have been released.
O2 parent Telefónica in July 2013 also announced the formation of a global mobile money partnership with Monitise, which some observers say could have influenced the mobile network operator’s overall mobile wallet strategy.
“O2 was one of the first to launch a mobile wallet and it took a distinctive approach,” Zilvinas Bareisis, a U.K.-based senior banking analyst with Celent, tells Paybefore. “In the U.K. especially, with Weve gathering momentum and building out a wallet infrastructure, individual operators are looking closely at how they approach mobile payments,” he says.
David Parker, founder and CEO, Polymath Consulting, says O2 deserves credit for being a mobile wallet pioneer in the U.K., but notes that O2 Wallet appears to be regrouping in the face of competition from fast-evolving mobile wallet rivals including bank-led solutions like Barclays Pingit and broader concepts like Visa Inc.’s V.me and MasterCard’s MasterPass. “The question is how long this will take them, and by pulling back, will they miss the boat as other mobile operators such as Vodafone move forward with their own offerings?”
