China UnionPay Announces Mobile-Payment Alliance

Chinese bank-card network China UnionPay today announced it has formed a Mobile Payment Industry Alliance that includes 18 national and local banks and supports international contactless standards–as it keeps up the pressure on China Mobile's RF-SIM-based payment scheme.

UnionPay said the alliance will seek to establish a standard specification and business model for mobile payment in China, “so as to create a harmonious and sound industrial environment.”

Although the UnionPay release does not mention China Mobile’s RF-SIM by name and, in fact, counts China Mobile as one of the members of the new alliance, it’s obvious that China Mobile’s SIM-based payment scheme is one of the driving forces behind the formation of the group.

The giant telco, the world’s largest in terms of subscribers, officially debuted the RF-SIM earlier this month at the start of the World Expo 2010 in Shanghai. The SIMs come embedded with their own antennas, operating on a much-higher frequency–the 2.4 GHz–than standard-contactless technology.

The cards, actually introduced last fall, store tickets to expo venues, transit-ticketing applications and China Mobile’s own payment service. The telco is bankrolling point-of-sale terminals at Starbucks, McDonald’s and other merchant locations to accept the cards, as well as ticketing readers at expo venues and readers at metro gates and other transit terminals.

The SIMs work in most phones, and China Mobile has justified development of its own proprietary technology in part by pointing out there are few standard NFC phones available. But as NFC Times has reported, the telco has recently signaled a pull-back from its headlong rush to roll out the RF-SIM.

UnionPay, which has a monopoly on handling domestic bank-card transactions, has made its displeasure at the China Mobile payment scheme known. UnionPay announced two months ago it would step up the rollout of contactless point-of-sale terminals, especially in Shanghai. The terminals will accept standard contactless cards and applications on NFC phones. Late last month, the payment network announced it would join with China Mobile’s smaller rival, China Unicom, to launch an NFC mobile-payment project with two major banks targeting merchants in and around the Expo venues–the place China Mobile is showcasing its RF-SIM technology. UnionPay has not disclosed a launch date for the NFC project, however.

Unicom and the two banks involved in the project, Bank of China and Bank of Communications, are also part of the Mobile Payment Industry Alliance, along with two other major banks, Agricultural Bank of China and China Construction Bank. Handset makers Nokia and Lenova are also among the founding members, along with unnamed smart card and chip vendors, terminal operators, systems integrators and research organizations, said UnionPay.

The announcement said the platform the alliance develops could also be used by transit operators, utility companies, cinemas and other service providers to offer mobile services.

“The industry alliance integrates the consumer’s need, operator’s network capability, bank’s credibility as well as the seller’s marketing ability to forge a mobile electronic-business circle that blends both remote and short range payment,” stated the release.

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