Telefónica‘s UK operation has partnered with NatWest bank for its first payments offering. Although the new O2 Money service currently includes just two low-tech prepaid card offers that add the simple twist of sending the cardholder a text message each time they are used, O2’s chief executive Ronan Dunne has clearly signalled that this is just the start of the mobile network operator’s move into the payments arena.

“O2 has a strong and successful track record of innovation and O2 Money will represent a launchpad into a wide range of mobile banking services”, says Dunne. “We believe that we are at the start of a journey towards the coming together of phone and wallet and we intend, through O2 Money, to be at the forefront of this trend. This launch represents an important step towards O2 becoming a leading service provider with mobile at its core.”

“The strength of our brand and relationship with our customers gives us the ideal opportunity to take O2 into a completely new market,” Dunne added. “By bringing a fresh, transparent and customer-focused approach to pre-paid cards, we plan to drive this market and take a significant share.”

Quizzed by reporters on the future direction of O2 Money, Dunne confirmed that O2’s NFC technology is now ready to roll out and that the operator is heavily involved in pushing towards the deployment of NFC services in the UK.

“As you know O2 led trials [of Near Field Communication technology in mobile phones] last year, and we engaged with a number of commercial organisations in that area,” Dunne told reporters, according to TechRadar:

“Customers loved it, and the challenges now are with electronic point of sale capability, and deployment across mass retail.

“We’ll be talking to large retailers, grocers for instance, also people in the transport industry [about bringing the technology to market].”

O2 used around 500 people in the trial, which saw them using their mobile phone to make smaller payments, similar to Visa’s Paywave system, and swapping an Oyster card for a phone in London too.

However, Dunne pointed out while NFC might be coming to fruition, the next stage of deployment is far from a foregone conclusion:

“It’s one of those situations where the technology is ready to go, but we need more deployment to get critical mass. We’re confident you’ll see substantial progress in that space, under the O2 brand, in the not too distant future.

“I think the wholly held industry view is that NFC has proven capability; we’re just waiting for mass deployment of terminals and other key components.

NatWest has also signalled its readiness to adopt new ways of using the mobile channel to improve its service offering.

“More people than ever are using their mobile phones as a means of managing their money and NatWest is always looking at new ways of incorporating the mobile phone into our services, to ensure our customers can interact with us as easily as possible,” says Helen Page, managing director of marketing and innovation at NatWest.

“These cash cards, delivered in partnership with O2, are the first step on the road towards a more advanced mobile banking service, and the closer alignment between mobile phones and payment technology.”

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