Gemalto: Time to educate market for NFC adoption in China
|According to global digital security leader Gemalto, time is now ripe for the China market to promote the use of mobile phone for making payments in full swing, but it still needs one extra push - market education.
"With one of the highest mobile phone penetration rates in the world, China has already had a decent base for further utilizing mobile phone for a variety of applications. The technology for enabling mobile phone payment is also mature," said Peter Chen, Business Manager, New Product of Telecommunications, Greater China of Gemalto.
"Whenever talking about people's own money, they tend to be edgy and sceptical. Perception is everything at this juncture. Therefore it is important that the technology for mobile phone payment is secure. It is even more important that potential users ‘feel' that this technology is secure," he said.
The technology for mobile phone payment that Chen referred to is "Near Field Communication" (NFC). Embedding a NFC SIM card or chip into a handset, it will then turn mobile into a ‘wallet' where consumers can store credit cards, gifts cards, loyalty cards, transport tickets and mobile coupons all securely in one place.
What's the view on the street•Gemalto conducted a consumer survey on NFC acceptance in the UK market in late 2011 that highlights the need for consumer education on NFC - or to put it correctly. Its results are also good food for thought for NFC's potential roll-out in China.
Gemalto commissioned a survey of over 2,000 mobile phone users on their knowledge of NFC. The results show that only 32% of the respondents know what NFC actually stands for. Over one third of respondents worry about using a mobile wallet for security reasons, 46% of people surveyed were concerned that users would run up huge bills if their NFC phone was stolen.
"Though the survey was conducted in the UK, but its results probably reflect the sentiments of consumers in many other markets including China," Chen said.
Secure, and beyond security
"The NFC technology is ready and it is now integral to the mobile payment sector. With the secure platform, NFC payment could be as safe as the banking cards." explained Chen. Much like Chip & PIN banking cards, about which many consumers had reservations when they first appeared, NFC SIM cards storing consumer payment credentials are certified according to security standards defined by financial services authorities such like Visa and MasterCard. This ensures they are at least as secure as the credit cards. Furthermore, with secure over-the-air technology, payments can be immediately blocked remotely, which means that all of these can be cancelled in one foul swoop if the device is lost, rather than having to contact each card issuer individually. This coupled with the ability to attach a PIN code to authenticate transactions, provides users with control like never before.
"Mobile NFC services will bring a whole new dimension to people's digital life, transforming mobile phones into contactless devices for tap-and-go applications, including transport ticketing, payment, loyalty and other innovative services like smart poster, peer-to-peer or access control," said Chen. "Leveraging on contactless technology and the interactivity of mobile phones, service innovation becomes limitless. It will also extend the services of banks, network operators and add more value for them to attract potential customers."
Nevertheless, all the aforementioned benefits especially its high security precautions need to be known by the consumers. A massive consumer education is crucial to make the introduction of NFC deployment to China a big success.
Gemalto as a Seasoned Enabler of NFC Deployment
One model that can address the business and operational requirements for the successful mass deployment of mobile payment is to use an intermediary- a Trusted Service Manager (TSM). This approach, endorsed by the GSMA, has the significant advantage of rapid scalability.
The main role envisaged for the TSM is to help service providers securely distribute and manage contactless services for their customers using the networks of mobile operators. However, the TSM does not participate in actual contactless transactions using NFC devices. These transactions are processed normally in whatever system the service provider and its merchant partners have already put in place. Another possible role of the TSM that can accelerate the successful deployment and ramp-up of mobile NFC applications is to act as a commercial intermediary that facilitates contractual arrangements and other aspects of ongoing business relationships between service providers and mobile operators.
"Gemalto has unrivalled experience in managing the complexity of building a mobile contactless ecosystem, with more than 50 NFC projects globally," said Peter Chen. "Recently, the NFC standard has been finalized to be the frequency of 13.56MHz, which is poised to help the country receive a boost in the mobile payment sector."
Gemalto is positioned in a pivotal role in the NFC market providing both UICC and the TSM for NFC services on a worldwide basis, with high-profile services launched with major players such as IDA in Singapore, ISIS and JPMorgan Chase in the USA, as well as KDDI in Japan. The NFC services management in Singapore, powered by Gemalto Allynis TSM solution, has official gone live in early August 2012. This is the first time that the mobile operators and a range of other service providers join forces to launch nation-wide NFC services to the general public using a unified, comprehensive TSM solution.