Mobile payments deadlock begins to unravel as EE debuts Cash on Tap

Mobile payment tools are gradually gaining ground across Europe

Mobile operator EE is launching a UK mobile payments service called Cash on Tap, in a move that highlights recent efforts across Europe to make mobile payments a reality.

Users will download a mobile app from the Google Play store, which works on select 4G EE handsets. They will then be able to make NFC contactless payments in the same way as a contactless debit card, by holding their smartphone over a MasterCard PayPass contactless payment terminal. Alternatively, they can also make online payments, using a virtual MasterCard account linked to the Cash on Tap app. The system was built using technology provided by specialist firm PrePay Solutions.

“There’s been a lot of anticipation in the market for a solution that delivers on the promise of mobile payments,” said Ray Brash, chief executive at PrePay Solutions. “This development makes mobile wallets a reality. We’re very pleased to stand alongside EE and MasterCard as we make this major foray into this new territory.”

PrePay Solutions is a joint venture between MasterCard and Edenred, a company specialising in pre-paid corporate services such as employee benefits. The company is active across the EU and Turkey. EE is a UK mobile operator jointly owned by Deutsche Telekom and France Telecom. EE is the owner of Orange UK and T-Mobile UK, and is the largest UK operator by subscriber numbers with approximately 27.5 million users.

Development of NFC and mobile payment solutions has become a fixture of industry debate over the last decade. Earlier this year, speakers at the Digital Services Conference hosted by Informa in London expressed frustration at the lack of progress made by mobile wallets in the UK and called for more innovative solutions to bypass the impasse.

“After seven years and millions of pounds of investment, you still can’t buy a mobile handset anywhere in the UK that will let you ride a London bus using NFC,” said David Birch, director at IT consultancy Consult Hyperion. “That is evidence of a structural flaw. Something isn’t working right.”

The main limitation of the EE/MasterCard system is that users will need to manually top up Cash on Tap by loading funds from bank transfer or debit/credit cards. In addition, Apple has left NFC functionality out of the iPhone, so the new service would only work on NFC-enabled devices.

However, despite the drawbacks, efforts to push mobile payments forward have finally gained some ground in recent months – including possible solutions for the iPhone in other parts of Europe. In Slovakia, Tatra, part of Raiffeisen International Bank, launched a special Wireless Dynamics-supplied NFC-enabled iPhone case branded as the iCarte in May 2012, helping to bridge the gap.

Meanwhile, Visa and Samsung are working on embedding Visa’s application for mobile payments into the hardware of future handsets. By 2020, Visa Europe estimates that 50% of its transactions will originate with NFC-enabled phones, largely replacing the contactless cards currently being carried by 60 million Europeans.

In July, six Polish banks announced they will collaborate to create a new standard for mobile payments that is expected to reach 70% of banking customers in Poland. Alior Bank, Bank Millennium, Bank Zachodni WBK, BRE Bank, ING Bank and PKO Bank Polski intend to build a common infrastructure including standard authorisation and settlement. The system will be open to all market participants, including other banks, and will support abilities such as mobile cash withdrawal from ATMs and mobile money transfer.

Meanwhile in Spain,  Spanish banks La Caixa and Santander have partnered with telecoms firm Telefónica to create a joint venture offering mobile payment services and a digital wallet designed to relegate conventional payment methods to the history books. Users of the new service will be able to gather all their credit cards into the new digital wallet; they will also be able to send and receive funds via their mobile phone. Bank account details will not be necessary; all the sender needs is the recipient’s phone number.

Closer to home, Starbucks recently pledged to roll out contactless terminals at over 550 of its company-owned stores across the UK. In London, it is already possible to purchase coffee using Orange Quick Tap, an NFC mobile payment service that works on Samsung Galaxy S III phones. Quick Tap was developed in collaboration with Barclaycard.