Vodafone adds bank cards to mobile payment service

The upgraded version of Vodafone Wallet will become available in Europe during the second quarter. It's a step up from the tag-based payment service the operator offers in Germany, Spain, U.K., Italy and the Netherlands. Instead of sticking a tag on the back of the phone, an alias of each card will be stored on an NFC-compatible SIM card. The cards are added using the Vodafone Wallet app.

For users, special SIM cards aren't as straightforward as when the technology is built into their smartphone, which is what Apple has done with Pay. However, choosing this setup makes Vodafone Wallet compatible with more phones and the operator won't be dependent on smartphone manufacturers to make it work. Vodafone said Wallet will work with existing contactless terminals and a wide range of Android smartphones.

So far, telecom operators have struggled to make a go of mobile payments. For example, the Softcard joint venture (formerly known as ISIS) between U.S. AT&T, T-Mobile, and Verizon is shutting down its service on Tuesday. The technology and intellectual property has been sold to Google. As a result of the deal, the three operators will preload Google Wallet on new Android smartphones this year.

While Apple Pay has raised awareness about mobile payments, the service isn't yet available in Europe and European Google Wallet users can't pay for goods in stores. Also, Samsung Electronics is prioritizing the U.S. and South Korea for the initial roll out of its Pay service later this year. So, while success is far from certain, Vodafone seems to have a small window of opportunity.

In Europe, Visa is also working with Orange and TIM, but their payment services use prepaid cards just like the old version of Vodafone Wallet.

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