Vodafone signs up with visa to boost contactless payments service

Vodafone’s customers will soon be able to pay for a coffee or a trip to the cinema with a wave of a phone. In a last-ditch attempt to take a slice of the growing “mobile commerce” trend,

Vodafone has signed a deal with Visa that it hopes will bring contactless mobile phone payments to its customers within three months. The mobile phone network has signed up with Carta

Worldwide, a Canadian company, to provide the technology. The service will be available on Android phones and for transactions of less than £20. EE has already made inroads into the “wave

and pay” market with its EE Cash on Tap service, which it launched with MasterCard. The network allows users to pay for bus and rail tickets in London and low-value items in McDonald’s,

Marks & Spencer and Pret A Manger. Vodafone customers soon will be able to add their bank card details to the Vodafone Wallet app and a virtual copy of the card will be stored on a

SIM card that can handle near-field communication payments. NFC is used for the London Oyster card and other contactless bank cards. Customers will confirm that they own the card using

“Verified by Visa” authentication. Items paid for by phone will be debited from the customer’s bank account, not added to a phone bill, with larger payments still protected by a PIN code.

Advertisement The mobile industry has been highlighting the prospects of mobile payments since the turn of the century and has poured millions of pounds into systems, software and security

to open up the prospect of the smartphone absorbing the wallet and all the cards in it. Yet previous attempts to corner the market for mobile payments have failed, notably the Simpay

alliance last decade and the Weve joint venture two years ago. While consumers are now accustomed to using their phones to make payments, it is typically through iTunes or apps such as eBay

and PayPal, which processed $27 billion-worth of smartphone payments in 2013. Google and Apple have launched their own payment services, while start-ups such as Square and iZettle have

developed technology designed to transform the smartphone into a cash machine. Google bought Softcard, a mobile payments company backed by the big US telecoms companies, this year. Yet the

networks, who already have a billing relationship with billions of customers, have failed to tap into the “m-commerce” market in a meaningful way. O2 launched a “wave-and-pay-style” payment

system on a phone alongside Samsung at kiosks during the London Olympic Games and said that it would look to add NFC-payments to its O2 Wallet in 2013. It cancelled its wallet service last

year. Vodafone has had more success in emerging markets with its Mpesa service, used by millions of people in east Africa, India and eastern Europe to transfer small amounts of money between

phones. The service has been very popular since it was launched in Kenya, thanks largely to its low-tech system, which works on even the most basic of mobile phones, as well as the lack of

traditional high street banking in those markets.