Has China Mobile found the business model for mobile contactless and NFC?

OPINION: One of the key forecasts in our new report ‘NFC: The Road to Commercial Deployment’ is that successful NFC services will require one company to firmly take the lead, and that this will inevitably see banks and mobile network operators going head-to-head in a battle to win control of consumers’ mobile wallets.

The news this week that China Mobile has begun a major commercial deployment of mobile contactless payments looks set to confirm our prediction, with a twist. China Mobile has opted to go it alone with its deployment, without any involvement from the Chinese banks and, more, has chosen to use proprietary non-NFC standard RF SIM technology for its new service.

But Chinese bank card association China UnionPay is unlikely to simply sit on the sidelines and watch while China Mobile builds a major new payments business. It recently signed a strategic cooperation agreement with China Unicom, the country’s second largest mobile operator, that will see the two developing a series of co-branded mobile payments services. These are expected to be based on NFC technology and, therefore, would be incompatible with China Mobile’s RF SIMs.

Will China provide a blueprint for how to get NFC and mobile contactless services off the ground in other countries, too? Either way, the country’s banks, operators, retailers and transport providers are going to be ones to very closely watch in the year ahead…

Sarah Clark, Editor

P.S. Not got a copy of ‘NFC: The Road to Commercial Deployment’ yet? Find out more and order your copy here.

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2 comments on this article

  1. Sarah:

    The movement to the RF-SIM (2.45 GHz) in China is a good move toward an international “standard”. I expect a reaction to that statement. However, the RF-SIM is a clean frequency that is a standard by itself. No special requirements for different protocol based on different parts of the world. And, the RF-SIM has a large memory for menu guided OTA additions of any local special transaction processes, such as event access, transportation, etc. Any bank’s local Mobile Banking Application can be added OTA. The RF-SIM includes the interface for loyalties and barcode reading/referencing. The RF-SIM provides all requirements to function as a GS1 retail transaction device. Any RF-SIM cell phone has full mobile financial transaction capabilities, including eWallet, Debit/Credit cards, etc.

    In China, the RF-SIM has a special firmware to provide high security communications. The firmware links the RF-SIM to a comprehensive financial processor backend. This backend provides the link to the carrier and the financial clearinghouse such as China Union Pay and First Data Corporation. This is a highly secure system. The actual carrier and RF-SIM relationship in China is a three way exclusive contract. China Mobile, China Unicom and China Telecom have a contract with the SIM Firmware / Backend Processor Company, which has a contract with China Union Pay for the financial processing.

    The RF-SIM is a product which can be added to most current GSM phones – allowing a broad and quick entry to NFC around the world. The major retailers in China, who are adding a 2.45 GHz reader to their authorization terminals, will do the same outside of China.

    The secure firmware in the RF-SIM provides for cell phone to cell phone direct transfer of funds. The RF-SIM is a Transceiver – allowing a cell phone with an RF-SIM to function as an authorization terminal. Finally, a true low cost mobile POS.

    There is an odd Chinese video circulating on the internet showing the many uses of the RF-SIM. Funny, but not a true use of a short read communications process that functions as required by financial standards for secure transactions.

    The China RF-SIM system of SIM/firmware cards and Backend Server is entering a worldwide launch, exclusively by MobilePAY, a Colorado USA Corporation. The RF-SIM has been in test and operation in China for three years. MobilePAY has been preparing the RF-SIM for worldwide launch for the past year. Many major companies will be involved. Phase one of the launch will be person to person transfer of funds. As an example, in the underdeveloped parts of the world, the local grocer or doctor will simply use an RF-SIM cell phone to receive NFC payments for the funds received by their customers.

    Here is to a real NFC standard.

    Rick May
    Chairman, MobilePAY

  2. Sarah:
    I see that VeriFone made public their RF-SIM investment in China. Thus, we can say that the system we are launching around the world is the Trunkbow System.

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