Mobile operator O2 has launched a mobile wallet service to compete with rival mobile payment systems from the likes of Barclays, Google and PayPal.

The new service, called O2 Wallet, allows consumers to transfer money across any network, make online purchases and conduct price comparisons by scanning product barcodes in shops. Users can also get daily discounts from retailers such as Debenhams, Comet, Sainsbury’s Direct, and Tesco Direct, via the ‘My Offers’ icon.

Unlike Google Wallet, however, O2 Wallet does not currently allow users to make contactless payments using their mobile phone. The company said that the service will eventually evolve to incorporate near field communications (NFC) technology, but in the meantime users can apply for a physical O2 Money Visa Account Card that allows them to make purchases on the high street or withdraw cash from ATMs.

Users can keep track of their transaction history with texts alerts when the account balance changes. They can also view a 30-day payment history on the app, or a 12-month history online.

Many consumers are still sceptical about the security of smartphone-generated payment solutions, particularly after a major hole was discovered in the Google Wallet mobile payment platform earlier this year. But James Le Brocq, managing director at O2 Money, said that O2 Wallet has undergone extensive ‘stress-testing’ with security experts.

“In addition to PINs and passwords, all personal details and financial data are held on remote central servers rather than on the mobile device itself,” he explained. “This, we believe, is the safest and most secure way to deliver mobile payment services.”

O2 Wallet is compatible with the majority of smartphones, as well as Apple iPads, the company said.

Commenting on the launch, Ovum analyst Eden Zoller said that O2 wallet is “one of the most comprehensive” mobile wallet services of its kind, although the lack of support for NFC makes the service “essentially a mobile web and online proposition.”

Zoller also said it could be difficult to position O2 Wallet alongside the collaborative mobile payments service that O2 is planning with Vodafone and Everything Everywhere in the UK, known as Project Oscar. This venture is currently being investigated by the EC on potential anti-trust grounds.