MasterCard and Everything Everywhere to develop digital wallet services

MasterCard will work with mobile operator Everything Everywhere to develop mobile and digital payment solutions.

The five-year partnership will see the two firms compete with the likes of O2, US-based Google Wallet, PayPal and Barclays PingIt, which all offer mobile payment services.

Unlike O2's application, customers will initially be able to make payments using mobile devices that have near-field communications (NFC) functionality, allowing customers to make contactless payments at more than 100,000 retailers in the UK.

The firms said that they would then focus on other areas of development including person-to-person money transfers, loyalty rewards schemes and digital payment services that will allow consumers to have the same shopping experience for payment in-store, online or using their mobile device.

In addition, MasterCard and Everything Everywhere will develop services that allow small business customers to accept payments using mobile devices, with further details to be announced later this year.

The two firms have an existing relationship, having worked together for Orange's Quick Tap platform, which allowed Barclaycard customers to use NFC technology to make payments.

The news will further intensify the battle for a share of the e-wallet market, in which competing companies have different views on the technology that best suits consumers in making payments.

O2's Money market development manager Claire Maslen had told Computing that the recently launched O2 Wallet application will soon incorporate contactless payments and then the mobile operator may also introduce its own handsets, while PayPal's e-wallet option is to continue to be developed without NFC technology.

The news could cast further doubt over Everything Everywhere's joint mobile payments venture with Vodafone and O2.

The venture, dubbed Project Oscar, was set up by the three companies last year but has since stalled while the European Commission (EC) carries an in-depth investigation into the tie-up's implications for competition in the market for e-wallets and related services.