Taiwanese Telco and Banks Announce Plans for NFC-Payment Projects
Taiwan’s largest mobile operator, Chunghwa Telecom, and four banks announced plans today to launch NFC mobile payment, likely starting with Cathay United Bank and a six-month pilot.
As NFC Times reported earlier this month, Taiwan’s banking regulator, the Financial Supervisory Commission, was expected to grant approval for NFC mobile payment on SIM cards and managed over the air by Chunghwa Telecom’s own trusted service manager to four banks, including earlier approval for Cathay United, along with approval soon to Chinatrust, Taishin International Bank and E.Sun Commercial Bank.
The banks will launch mobile credit card services supporting MasterCard PayPass. Sources told NFC Times that Cathay United or Chinatrust would be the first to launch service, putting the PayPass credit application on NFC SIMs supporting the single-wire protocol and issued by Chunghwa Telecom. Chinatrust and Chunghwa Telecom earlier in May announced the launch of a co-branded physical credit card. Cathay United has been perhaps the most active Taiwanese bank in the past in holding trials using NFC and bridge technologies.
Under the terms approved by cautious government regulators, Taiwanese banks launching NFC must start with a six-month trial, reportedly with up to 1,000 employees of the bank and telco. But the service could reportedly be expanded to regular customers after that, provided there are no significant security problems.
The first pilot is reportedly expected to use as many as seven NFC-enabled phones, including the Sony Xperia Z and Xperia TX, HTC One and Samsung Galaxy S III and Galaxy Note 2. France-based Gemalto is to supply the NFC SIM cards for the projects.
There are about 25,000 point-of-sale terminals in Taiwan that accept PayPass, along with Visa payWave and JCB's J-Speedy contactless applications.
The government approval requires Chunghwa Telecom’s own TSM to be used, which the telco developed in-house. Chunghwa Telecom’s TSM has already been certified by MasterCard for downloading and managing PayPass applications in NFC phones.
Joint Venture TSM to Launch in 2014
Chunghwa Telecom is launching the project ahead of the formation of its planned joint venture with Taiwan’s two other major mobile operators, Taiwan Mobile and Far EasTone, along with two smaller telcos, Vibo Telecom and Asia Pacific Telecom, and EasyCard Corp. EasyCard operates a much-used closed-loop contactless transit fare-collection and retail payment scheme in Taiwan.
The six parties together are investing an initial NT$150 million (US$5 million) in the joint venture, which is to be registered before the end of this month. The venture’s main role is to hire a centralized TSM and mobile-wallet platform provider for the island nation.
A recent request for information, or RFI, sent out by joint venture organizers called for the TSM and mobile-wallet platform to be built by the first quarter of 2014 with plans for a launch in the second quarter of 2014.
It remains to be seen how services launched before that by Chunghwa Telecom and one or more Taiwanese banks will work with the third-party TSM and wallet platform launched by the joint venture, of which Chunghwa Telecom is a part.
It seems unlikely the other mobile operators in the venture would agree to use Chunghwa Telecom’s TSM and would likely look to global TSM providers for the contract.
France-based Oberthur Technologies in February announced it was providing a TSM platform to a local Taiwanese “digital security provider,” Smart Catch International, formed in 2012 and funded by Kainan University Group. They responded to the joint venture's RFI. The five other companies that responded to the RFI are Gemalto, Morpho-Cassis, Giesecke & Devrient, SK C&C and Oasis, sources told NFC Times.
This TSM would manage the NFC SIMs, or possibly other secure elements, the members of the joint venture use. Separately, the Taiwanese government is planning to draft specifications that would underpin a centralized service provider TSM platform that banks could use to personalize their applications on the secure elements.
As NFC Times reported in April, a total of five banks in Taiwan are expected to receive approval this month or in coming weeks from regulators that would allow them to issue mobile credit cards that could be downloaded over the air to SIM cards in NFC phones or, in the case of one of the banks, Taipei Fubon Commercial Bank, preload a credit card application on a SIM.
Fubon is expected to launch NFC with another operator, Taiwan Mobile, which does not have an approved TSM.
In addition, any mobile NFC service introduced by EasyCard would also have to be preloaded on SIM cards, since it doesn’t yet have approval from regulators for its EasyCard application to be managed over the air.
Meanwhile, Chunghwa Telecom has said it would launch a separate mobile-payments service based on QR codes that could be used for some transactions in convenience stores and restaurants, as well as for online purchases. A trial is possible soon. The service would be part of a separate mobile wallet.