Visa Inc. and Vodafone Australia Ltd., are launching the SmartPass mobile wallet, which lets consumers with Near Field Communication-equipped phones make payments through a virtual Visa prepaid card.

Vodafone Australia, a unit of Vodafone Hutchison Australia Pty Ltd., and Visa announced Nov. 20 details of the mobile wallet venture it will test in Australia through the end of the year and make available to consumers worldwide in early 2013.

"NFC is fast-becoming the 'it' feature for smartphones, and for very good reason," Thomas Roets, general manager of strategy and business development at Vodafone, said in a blog post on the Vodafone Australia website.

The Vodafone SmartPass application will allow contactless mobile payment through a smartphone, such as the Samsung Galaxy SIII, Vodafone says.

Consumers who download the SmartPass application onto a phone that uses NFC (either from a built-in chip or a SIM card that adds the technology) will register a virtual Visa prepaid card account. The account can receive funds from a linked Visa or MasterCard payment card.

Vodafone Australia predicts that next year, 80% of the smartphones sold through Vodafone contracts will have NFC technology.

Vodafone Australia's SmartPass application again signals that carriers are going to create their own mobile wallets, says Zil Bareisis, a London-based senior analyst for research firm Celent.

"These mobile wallets are essentially open-loop reloadable accounts accessible via a mobile device," Bareisis says. "Some mobile network operators might use a partner bank … but others will do it directly or via their subsidiaries with e-money licenses."

The advancement of mobile payments may benefit banks, as issuers may see more card transactions from users as they up mobile prepaid accounts, Bareisis says.

However, there is the potential that these top-ups could cannibalize conventional card payments instead of cash, he says.

"If this starts encroaching on regular debit card transactions, banks are not going to be too happy," he adds.

The Vodafone SmartPass system operates with prepaid payment processor Rev Worldwide, as well as Australia and New Zealand Banking Group Ltd.

ANZ group provides the virtual Visa prepaid card and serves as the acquiring bank for loading funds. Austin, Texas-based Rev connects into VisaNet to process the transactions, Vodafone says.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry