09 February 2016

EC green lights UK telcos' mobile wallet plans

05 September 2012  |  8623 views  |  3 EU building, Brussels

The European Commission has given UK wireless operators Vodafone, O2, and Everything Everywhere the green light for Project Oscar, their mobile payments joint venture.

Oscar - first announced last June - aims to create a single mobile wallet platform hosting cards, coupons and transactional information on the SIM card. Banks, card schemes, retailers, transit companies and other telcos would be able to rent space on the SIM under a subscription model.

The EC opened an in-depth inquiry into the JV in April after its initial investigation raised concerns that the plan could stifle competition, blocking future rivals. Among the most vocal critics of the plan had been smaller telco Three, which has been excluded from the early stages of the project.

However, the Commission says it has now "unconditionally approved" Oscar on the basis of the EU merger regulation, concluding that it "will not likely lead to a significant impediment to effective competition in the EEA".

The investigation revealed that a number of alternatives already exist and much more are likely to emerge - some operating on the SIM, and others in the cloud. In its ruling, the EC states: "It is unlikely that the creation of the joint venture will allow the parent mobile network operators to block these alternative routes to market using technical or commercial means."

Joaquín Almunia, Commission VP in charge of competition policy, says: "Mobile commerce is a nascent sector that may radically change the consumer buying experience in the next few years...The Commission is keen on promoting innovation in this area and ensuring that the markets remain open so that a number of competing solutions can emerge without undue obstacles, to the benefit of consumers."

Comments: (3)

Peter Bove - Aviso - London | 05 September, 2012, 12:26

Not sure I'm wildy enthusiastic about having my wallet and transactional information stored on the SIM, even if the SIM security is enhanced, it is still an unneccessary risk.

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Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 07 September, 2012, 13:52

Not sure why the MNO consortium has chosen to rent space on the SIM card and, as Google Wallet found out to its dismay, risk limited adoption by consumers. On the other hand, even when GW moved to the cloud recently to enable consumers to add any card of their choice as the funding mechanism, the need to store one card on the phone hasn't gone away. As we've seen here, this card can't be a credit card earning much higher interchange fees for Google. Makes me wonder if NFC - as against QR code - based mobile wallets face certain fundamental technology / business model constraints viz. (a) Force the payment service provider to store at least one card inside the phone, and (b) Not permit consumers to add their preferred cards to the phone in the non-cloud implementation.

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A Finextra member | 10 September, 2012, 13:49

Isn't 'green light' a bit strong? This is not a formal 'negative clearance' as could be obtained in the 1990s. All it means is that the EC decided not to further pursue any lines of enquiry connected with the proposition that has been put on the table. They are at liberty to take it up again if the implemented version is different from the blueprint version. As well, anyone can file suit in a Member State court-of-law if they think Project Oscar is behaving in an anti-competitive manner in future.

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