To develop a successful mobile wallet, many agree industry collaboration is necessary. But how much collaboration is too much?
The U.K. telcos behind Project Oscar, an overseas version of the Isis venture in the U.S., found out firsthand when a regulatory inquiry forced them to shelve a trial planned for the Summer Olympics. The European Commission finally gave Oscar its stamp of approval last week.
Verizon Wireless, T-Mobile USA and AT&T, the American companies behind Isis, are not immune from similar scrutiny. In particular, two of the Isis partners, AT&T and T-Mobile, called off a planned merger last year after they faced a Justice Department lawsuit stemming from claims that their combination would have a negative impact on the U.S. wireless market.
The fate of Project Oscar was never certain, even to the telcos behind it. While the commission examined the joint venture operation the past few months, the carriers involved arranged separate partnerships to offer and develop mobile payments.
Everything Everywhere, Vodafone UK and Telefonica UK form the joint venture, which they announced more than a year ago.
Project Oscar utilizes Near Field Communication as its driving technology for merchant-to-consumer communication and contactless payments, making it similar to the Isis joint venture in the U.S.
However, while Isis has secured several issuing banks as partners, the banking aspect of Project Oscar remains unclear, says Zil Bareisis, a London-based senior analyst for research firm Celent.
With the early focus of Project Oscar on mobile marketing instead of mobile payments, it is "too early to say what the ultimate implementation of payments for Oscar will look like or what the role of banks would be," Bareisis says.
The individual partnerships between the mobile network operators and card schemes may not fit with Project Oscar and its "single point of contact for mobile wallet infrastructure," Bareisis adds.
Project Oscar is designed as infrastructure, not as a consumer-facing brand. Individual phone companies would develop their own systems for delivering Oscar coupons for the project's marketing component.
In this way, the joint venture provides the "technical backbone" that enables third parties to create one mobile version of their cards that will work in all wallets of all companies that are customers of the joint venture.
In addition, individual mobile phone companies that are customers of the joint venture will also be able to create their own first-party cards specifically for their own customers.
Isis has a comparable approach, though the Isis has so far been promoting its own brand to consumers and banks alike. Under the Isis system, each issuer has a dedicated area within the Isis app. In this area, the issuer has full control over the branding and mobile-wallet services it provides. The Isis wallet serves as a wrapper for the multiple card accounts that would be accessed this way.
A representative of Isis was not available prior to deadline.
Despite the delays and regulatory scrutiny, the Oscar telcos will likely find themselves in a winning situation, Bareisis says.
"As long as the UK consumer is getting used to taking the phone out to shop and complete a transaction, whether through an individual mobile network operator wallet or to use a coupon delivered through a joint venture, the telcos will feel that they are making progress," he says.