NFC on SIM won't replace handset as mobile wallet

Summary:Near-field communication on SIM card complements, not substitutes, NFC-enabled handsets, says South Korea's SK Telecom. Visa notes importance of all NFC-enabling technologies, while highlighting success with SIM-based mobile payment initiative.

The implementation of near-field communication (NFC) within a subscriber identity module (SIM) card makes it easier to distribute the technology to consumers who no longer need to purchase NFC-enabled handsets. However, a South Korean telco notes that NFC-enabled SIM cards work in union with such handsets to drive mobile wallet adoption.

In an e-mail interview with ZDNet Asia, Park Konggyun, manager of SK Telecom's Ambient Technology Lab, said NFC-enabled SIM will not replace NFC-enabled handsets as mobile wallets. Instead, they will be complementing technologies, he said.

The Korean operator last month announced the launch of its "NFC on USIM" card, which is embedded with a 13.56MHz antenna, NFC chip and USIM chip.

Konggyun said: "Handset manufacturers have recently started to include NFC function in some of their handsets. With the various types of NFC built-in handsets available in the market, 'NFC on USIM' can be an option that customers can [use] to experience NFC services without having to change their handsets."

By inserting SK Telecom's chip, basic phones can be turned into mobile wallets, allowing consumers to make payments by tapping their mobile phones against an NFC reader.

According to Park, the company's NFC-enabled USIM communicates directly with smartphone applications as well as feature phones' virtual machine.

The technology, however, is not compatible with Apple's iOS platform because iOS devices such as the iPhone 4 use micro SIM cards which are smaller than the regular card. This limits the space needed to embed the antenna, NFC chip and USIM chip, he explained.

The iOS platform also disallows data transmission between the USIM card and application, he added.

The Korean telco is planning to work with mobile operators worldwide and USIM card distributors to push the adoption of its NFC on SIM technology.

All NFC enablers play role in driving adoption
Another NFC market player expressed optimism that NFC on SIM, along with other NFC enablers, will play a role in driving the growth momentum for mobile wallets.

Ashwin Raj, head of mobile for Visa's Asia Pacific, Central Europe, Middle East and Africa, said: "NFC technology, irrespective of the manner in which it is enabled on the mobile device, will be the driver for mobile wallets."

Aside from initiatives by phone makers to include NFC in their devices, Raj told ZDNet Asia that Visa's mobile payment application PayWave, for example, works with other technologies that facilitate NFC payments including SIM card, embedded NFC chips or MicroSD cards.

"Visa expects that the implementation of mobile wallets will vary from market to market," he said. "That's why we designed our mobile payment application to be technology-agnostic and support mobile wallets through a number of different 'secure elements'."

That said, Raj revealed that the payment services provider saw significant success in an NFC-enabled SIM card initiative it rolled out. Pointing to the case study in South Korea, he said Visa reached a "historic milestone" by garnering over 100,000 Visa account holders with SIM-based mobile payment.

The project, which was the company's largest commercial implementation of PayWave for mobile, was created in partnership with HanaSK Card, which is a joint venture between Hana Bank and SK Telecom, he explained.

Feature phone user Debbie Yong told ZDNet Asia that the idea of an NFC-enabled SIM card was appealing as it would "cost almost nothing" to have the advanced functionality. That said, Yong added that she would consider buying an NFC-enabled handset if the device was attractive.

Topics: Software, Apps, Hardware, Mobility, Networking, Software Development

About

The only journalist in the team without a Western name, Yun Qing hails from the mountainy Malaysian state, Sabah. She currently covers the hardware and networking beats, as well as everything else that falls into her lap, at ZDNet Asia. Her RSS feed includes tech news sites and most of the Cheezburger network. She is also a cheapskate mas... Full Bio

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