O2 hails success of Oyster-phone trial

The mobile-wallet tech proved popular with users in a six-month trial but a rollout could be five years away, says the operator
Written by Natasha Lomas, Contributor

Mobile operator O2 has announced the results of a six-month, mobile-wallet trial in London.

Despite claims that consumers are enamoured of having contactless travel capabilities embedded in their phone, an imminent wallet rollout does not look likely.

The mobile travelcard/wallet trial was announced in November 2007, with O2 partnering with AEG, Barclaycard, Nokia, Transport for London, TranSys and Visa Europe to trial a Nokia handset that included an Oyster application for travel around London. The NFC-enabled handset allowed users to pay for their journey by swiping their phone over a reader in the same way they would a travelcard, as well as pay for small purchases in shops.

Nine out of 10 trial participants were happy using NFC (near-field communications) technology on a mobile phone, and the majority (78 percent) said they would be interested in using mobile contactless services for travel or payment in future, according to O2.

Claire Maslen, head of NFC at O2 UK, said: "Consumers loved it. It was hugely popular." Maslen added that, at the end of the trial, some of the testers were "begging to keep the phones", particularly the Oyster travel feature.

She added: "We think enough trials have happened in Europe now. It's time to move [NFC] forward."

While almost half (225) of the 500 testers also got the Barclaycard Visa payWave application preloaded with £200 which they could use to pay for low-value goods at selected retail outlets, O2 said the Oyster function proved more popular than the payment app, with 89 percent of testers saying they are interested in taking up a mobile Oyster app, compared to 68 percent who were keen on adopting contactless payments.

According to Maslen, key issues for consumers that could influence take-up are the choice of NFC handsets (all testers used a Nokia 6131 clamshell NFC phone); user interface; the range of applications that can be loaded onto a mobile wallet — with participants keen to be able to carry other cards on their phones, particularly store-loyalty cards — and security around the system.

Discussing the trial back in July, Phil Pavitt, chief information officer of Transport for London, told sister site silicon.com: "There are so many questions to answer, around security primarily — not just one layer but real, big security here. The handset manufacturers have got to help us with that sort of conversation. This really is at pilot stage. We're not piloting the final strategy; we're piloting the concept while we're building the strategy."

The convenience of the mobile wallet is always going to involve a balancing act with security, according to O2's Maslen: "When we set off on the trial, initially security was number one. People were questioning it, trying to understand it. As things moved forward, what they realised was: there's a trade-off between having the convenience of all these features on the device and the security."

While testers saw the benefit of periodically having to enter a PIN to boost security, Maslen added, in some cases secondary authentication is not practical. "Say for Oyster, for example — that's not going to work," she said, with the extra time it takes to enter a PIN potentially causing a queue of commuters to build up.

When it comes to additional applications that consumers may look for, she said for Oyster: "The obvious thing for us to do would be to look to work with TranSys and Transport for London to develop a balance checker for your last five journeys", while, on the payments side, "people want to know what their balance is; they want to know what their last five transactions were".

O2 said the next step is for the company to form "a taskforce to work across the various industries" to explore issues around implementation and various commercial questions. Maslen also said all operators would need to buy in to NFC for the technology to take off — much in the way that SMS required all operators to back it before it became mass market — with enthusiasm from two or three big retailers also necessary to make the technology a mainstream proposition.

Asked when a rollout could realistically happen, Maslen said six months would be "hugely ambitious" but a timeframe of within five years is likely.

She added: "We could launch something, technically, now, but we really want to work with the other operators. This has to go mass market for it to be successful."

Transport for London, meanwhile, described NFC as "an exciting prospect for the future" and "one which could provide significant benefits for our passengers".

Suggestions at the trial launch last year by Nokia's Richard Humbach, head of the emerging business unit, that, in future, mobile-wallet applications could just live on the SIM, dispensing with the need to build actual NFC handsets, were rejected by O2's Maslen.

She said: "It's not quite as simple as that… If we take this existing device, there are two main pieces of infrastructure. You have the antenna — now that antenna will need to reside on any device for you to be able to use it. The brains, the secure element, resides on this handset and it's the secure element that you would be taking onto the SIM. So you would still need a range of devices… from all of the handset vendors. But the intelligence and the security is the piece that would reside on the SIM."

Maslen said O2 is in talks with handset manufactures other than Nokia regarding offering NFC phones but would not specify which companies are involved.

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