O2 Wallet: no users and too much competition. It had to go

Yesterday, O2 confirmed that it was closing O2 Wallet. The few who remembered the service weren’t surprised. I’d heard many whispers that virtually no one was using it.

And O2 itself barely ever mentioned it, never mind marketed it.

How times change. When O2 launched its wallet in April 2012, it was big news.

Lots of operators were looking at building services that gave consumers the chance to load a wallet app on their phones, top it up with bank funds, send money with a text message, and redeem discounts from supporting retailers.

They still are.

But O2 got there first and it did so in a big way by applying for an EU Electronic Money Institution licence.

These are the licences intended to encourage non-banks to compete in some way with existing financial institutions.

So O2 Wallet was born.

It wasn’t well-received. It seemed like a patchwork of products, was not very user friendly and was essentially not compelling enough to persuade users to try it.

Within months, it was bypassed by industry events. Telefonica itself said there have been “a number of developments in the financial services sector and also within Telefonica” that led to its decision to withdraw.

What are these?

Well, O2 itself was one of the founders of Weve, the cross-operator project designed to support mobile marketing by text, but with a longer term remit to tie this in to loyalty and payments.

Then there’s the big partnership with Monitise in which the latter – a mobile payments and banking specialist – will build a global technology platform to support Telefonica group services.

But O2 Wallet was also a victim of broader developments in the m-money space.

Take your pick from Barclays Pingit and the forthcoming Zapp popularising easy bank transfers, indies like MPayMe promoting pay-by-barcode, PayPal experimenting with a variety of tech, mPOS firms like iZettle looking to expand beyond card-reading dongles…

The list goes on.

All these ideas gathered a degree of momentum powered by the enthusiasm of specialists dedicated to the cause of mobile payments.

O2 Wallet, like so many single operator ventures before it, couldn’t compete.

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