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Japan’s second largest mobile operator, KDDI, said it would launch Japan’s first mobile NFC service late this month with the Samsung Galaxy S II–though the service will start out small because of the lack of phones that support both standard NFC and Japan's proprietary FeliCa technology, as well as Japan's nearly nonexistent infrastructure of standard contactless readers.

KDDI announced the move today, saying it would put the NFC-enabled Galaxy II smartphone on sale, but noting that most of the services would not begin to launch later in the spring or summer. 

The standard NFC services would include a MasterCard PayPass credit application from Credit Saison, an airline check-in program from Japan Airlines and a loyalty program from a Japanese camera shop chain. There would also be smart posters embedded with NFC tags that users could tap to download coupons. Other NFC tag applications would deliver tourist information in Tokyo’s Ginza shopping and restaurant district and would impart animal facts at the city’s Ueno Zoo.

KDDI said it would gradually add more NFC phones to the launch, though would not elaborate.

Update: The Android-based Galaxy S II with WiMax will not support Japan’s proprietary FeliCa contactless technology from Japan’s Sony Corp., but only types A and B of the international contactless standard, ISO/IEC 14443, KDDI told NFC Times. End update.

To read FeliCa, the NFC phones would require hybrid NFC chips, supporting FeliCa as well as standard NFC. These hybrid phones are not ready yet. End update.

The vast majority of acceptance points for mobile-wallet applications in Japan can only read FeliCa, including hundreds of thousands of terminals at retail shops and transit gates. These terminals are not interoperable with standard NFC phones, even though NFC technology also supports FeliCa.

Japan's three major mobile operators have agreed to move to standard NFC but need to support the legacy FeliCa infrastructure, using the hybrid phones.

There are believed to be only a few hundred retail point-of-sale terminals that can be read by standard NFC phones in Japan. The terminals support MasterCard PayPass. 

Update: Credit Saison, a credit card company, is to issue a PayPass application for the NFC phones, according to KDDI’s announcement today. Update: But the telco told NFC Times the timing of the launch is not yet determined. This might help project backers to roll out more point-of-sale terminals. At present, consumers could not use the NFC phones in many places in Japan without the hybrid FeliCa chips in the handsets. KDDI also plans to host a prepaid payment service, or e-purse, on the phones, but the timing of the launch of this application also is not set. 

Other, smaller issuers, such as Orico Corp., also are considering issuing a PayPass application for the NFC phones. Credit Saison and Orico have both been involved in NFC trials with KDDI. The telco told NFC Times the first services to launch will be the smart poster and loyalty program, which could begin in early February. Japan Airlines would probably launch the NFC-based check-in service in the summer. End update. 

All three of Japan’s major mobile operators, including market leader NTT DoCoMo, have said they would begin rolling out the hybrid phones this year, and NFC chip makers have been working on chips. Samsung's mobile handset division has expressed interest in manufacturing hybrid NFC-FeliCa phones for the substantial Japanese market.

DoCoMo has led the large rollout of proprietary contactless-mobile wallet phones based on FeliCa, which began in 2004. The telco has much invested in FeliCa, but a representative of the telco last month told NFC Times DoCoMo is committed to moving to standard NFC technology. The first hybrid NFC phones from DoCoMo aren’t expected until the fourth quarter.

DoCoMo's operator rivals, KDDI and Softbank Mobile, on the other hand, have been eager to move to standard NFC.

For its NFC launch, KDDI will use standard NFC-enabled SIM cards, supporting the single-wire protocol, from Japan-based Toshiba. MasterCard has told NFC Times it has certified the Toshiba NFC SIM to run PayPass.

France-based Gemalto will serve as trusted service manager for certain SIM-based NFC applications for the launch, KDDI said. Toppan Printing of Japan will develop applications and Japan-based Dai Nippon Printing will personalize some of the applications, including credit and loyalty, said the telco.

The three major Japanese mobile operators announced last month they had formed the Japan NFC Consortium to help them set standards for making the move to NFC from proprietary FeliCa technology.

The group will assist the telcos to “coordinate the adoption of multiple international standards” for the move to NFC technology, said the announcement.