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Handset maker HTC and Cathay United Bank of Taiwan, among other parties, are expected to announce plans to launch an NFC mobile-payment project putting a MasterCard PayPass credit application on microSD cards that can run in a full NFC phone model from HTC.

The project is the first of its kind outside of China, where China UnionPay and at least two banks, including China Construction Bank, have launched NFC mobile payment on what in China is called the HTC Stunning. The Android-based handset is believed to be a version of the HTC Incredible S equipped with an NFC chip and antenna and a single-wire protocol connection to the microSD card slot.

In Taiwan, Cathay is expected to announce the project Tuesday, using a similar phone as the one launched by China UnionPay, but with updated software. It likely will not be called the Incredible S.

UPDATE: EasyCard Corp. along with MasterCard Worldwide will also reportedly be involved in the announcement, meaning the microSD cards are expected to also carry the EasyCard contactless application that is accepted in Taipei and elsewhere on the island nation for transit fare collection and at about 12,000 convenience stores and other retail outlets. END UPDATE. 

UPDATE: Meanwhile, reports say Taiwan's three major mobile operators, Chunghwa Telecom, Taiwan Mobile and Far EasTone, along with Taiwan-based handset makers HTC and Acer, as well as EasyCard Corp. and two smaller telcos, are getting close to forming their proposed joint venture to roll out NFC services. They hope to launch NFC by the third or fourth quarter of 2012, according to a report.

As NFC Times first reported in May of 2011 and then in October, the Taiwanese telcos have been in talks to form a joint venture like the U.S.-based Isis JV created in 2010 by Verizon Wireless, AT&T and T-Mobile USA. The Taiwanese operators aim to set up a JV to help them implement a common platform they can use to roll out NFC payment and other services. They would use SIM cards as the preferred secure element.

The device makers, including HTC, have since joined in the discussions. The largest Taiwanese operators are expected to make a decision by the end of this month to go ahead with the venture, after agreeing to ownership shares. END UPDATE.

The NFC-enabled version of the HTC Incredible S that uses the microSD card as the secure element is different from other NFC-enabled Android phones HTC has introduced. HTC has released such high-end handsets as the One X and Evo 4G LTE, both of which carry embedded secure elements. And the HTC Droid Incredible 4G LTE will support secure NFC applications on SIM cards. The smartphone will be released soon in the U.S.

As NFC Times reported in February, two other Taiwanese banks have also considered launching PayPass on microSD cards in the HTC handset, E.Sun Bank and Taishin Bank. They have apparently decided not to launch the project.

In the NFC-enabled HTC phone in China and Taiwan, the single-wire protocol, or SWP, connection between the NFC chip and microSD card slot is not standard, as it is between the SIM card and NFC chip in SWP-enabled NFC phones. But international standards organizations are drafting specifications to standardize a SWP link for microSDs. 

By using microSDs as a secure element, banks can generally bypass mobile operators to introduce NFC mobile payment on their own. But in countries where telcos control the distribution channels, the operators could refuse to sell the phones or disable the NFC interface in them.

Giesecke & Devrient Secure Flash Solutions is believed to be producing the microSDs for Cathay United. The vendor is a joint venture of German smart card company G&D and Taiwan-based flash memory supplier Phison Electronics.

There are also microSDs on the market with their own embedded contactless antennas, from U.S.-based supplier DeviceFidelity.

But microSDs with their own antennas haven’t yet gotten beyond the trial stage. And so far, there does not appear to be a lot of demand in the West for microSDs that could connect to the antenna in full NFC phones, since few such phones exist. 

Separately from the microSD card project, Cathay United has also put PayPass on a locally produced NFC-enabled iPhone attachment. The add-on enables customers to use the iPhone 4 and 4S to tap to pay where PayPass is accepted.

The attachment had been earlier introduced by Taiwanese contactless fare-collection and payment provider EasyCard Corp. Chunghwa Telecom commissioned manufacture of the device. It is similar to the iCarte attachment from Canada-based Wireless Dynamics.

Cathay introduced about 500 units of the attachment in March and is preparing to make another 500 pieces available to customers. E.Sun and Taishin banks plan to introduce the attachment with PayPass in July, a source with Chunghwa Telecom told NFC Times.