By Elliott Holley

Telefónica has partnered with Spanish banks La Caixa and Santander to deliver mobile payment services and a digital wallet. Users of the new service will be able to gather all their credit cards into the new digital wallet; they will also be able to send and receive funds via their mobile phone. Bank account details will not be necessary; all the sender needs is the recipient’s phone number.

The idea behind the scheme is to combine mobile and banking technology to help boost sales for retailers by easing the connection between merchants and consumers through offers, discounts and promotions on a mobile device.

Spain has a strong recent history in alternative forms of payment; in 2012, Barcelona became one of Spain’s first “contactless cities” following a project between Caixa Bank, the Barcelona City Council, the Metropolitan Taxi Institute and Mercats de Barcelona. The city has 1 million contactless cards in circulation, 1,000 taxis using contactless points of sale alongside 40 municipal markets; the technology is also used in 17,000 points of sale in a range of retailers, from petrol stations to restaurants and supermarkets, according to Miguel Angel Pozuelo, head of new product and service development, CaixaBank.

“Contactless payment technology is swiftly catching-up with the use of physical cash in Spain, edging out notes and coins where they might have been used to pay for smaller items,” Pozuelo recently wrote in Telecoms.com’s sister publication Banking Technology. “Both merchants and consumers have come to realise the tangible difference that it can make to the efficiency and revenues of their business.”

The three firms claim that the deal is the first of its kind in Europe. However, Telefónica formed a similar deal earlier this month with MasterCard in Brazil to create a new company, Mobile Financial Services, which will also offer mobile payments to Brazilians, initially in the regions of Sao Paulo and Belo Horizonte. Called Zuum, the service in Brazil allows Brazilians to transfer money, buy credits for pre-paid mobile phones and pay bills with their mobile phone.

“There is a profound change happening in the way we buy things,” said José María Álvarez-Pallete, chief executive at Telefónica. “Digital technologies are transforming how consumers research products and then identify the best prices, promotions or discounts. This joint venture combines the partners’ technical and financial services expertise to create an ecosystem for the benefit of both retailers and consumers.”

Elliott Holley is senior staff writer on Banking Technology. www.bankingtech.com