Singapore Formally Begins Search for National TSM

Nov 19 2010

The Singapore’s Infocomm Development Authority has issued its long-awaited request for tenders to appoint a national trusted service manager and build an NFC mobile-payment platform.

The tender request, which the authority refers to as a “call for collaboration,” is seeking proposals from consortia made up of TSM vendors and Singaporean mobile operators, payment service providers and others, to build a national NFC infrastructure not only for payment, but mobile transit ticketing, couponing and other services. The authority, known as the IDA, expects NFC services to be launched in the island nation by the first quarter of 2012.

The IDA’s mandates and its expected financial assistance for the project represent the most direct government intervention yet into a country’s NFC ecosystem. While the IDA is not expected to issue regulations requiring all Singaporean telcos, banks and other service providers to use the platform and national TSM–which it calls a “trusted third party”–cooperation will be highly recommended among Singapore’s m-commerce players. Those players include telcos SingTel, StarHub and M1, payment service providers NETS and EZ-Link and credit card-issuing banks.

The government contends its hands-on approach is needed to enable service providers to offer interoperable NFC payment and other services to subscribers from any of the small island city-state’s mobile operators and to build “widespread adoption of NFC mobile services by merchants and consumers.”

But to be selected, the TSM and its consortium partners will have to make a number of commitments, including being able to offer consumers applications from at least four payment service providers within 20 months of winning the tender award. The payment applications must be based on widely accepted credit payment schemes, such as Visa Inc. and MasterCard Worldwide, as well as Singapore’s e-purse standard, CEPAS. The IDA is scheduled to award the contact next May or June.

The TSM also has to commit to provide transparent pricing and publish its fee schedule for managing applications on SIM cards or other secure chips in NFC phones or bridge technologies. The lower the proposed fees, the more likely the consortium will be chosen by the IDA.

And the winning consortium has to commit to providing transaction times for NFC payments at least as fast as those clocked by contactless cards in Singapore–that is, 500 milliseconds processing time and 8.5 seconds for the entire transaction, as measured in an October 2010 study commissioned by Visa. The average-8.5 seconds was calculated from the instant that the customer hands over his contactless card until the time the cashier hands back the receipt, according to the IDA.

The government agency also will insist the consortium commit to having a relatively modest 30,000 subscribers enrolled a little more than two years after getting the contract award, along with 4,000 merchant locations. It will also have to be handling at least 450,000 NFC-based retail payment transactions per month after 32 months.

The TSM will have to turn over ownership to the IDA of its interface specifications and processes for connecting service providers to SIMs or other secure elements in the NFC devices. The IDA said it needs to control the interface specs to ensure all prospective service providers can hook into the system in the future.

It remains to be seen how many proposals the government will receive by the Feb. 1 deadline from international TSMs, given the small size of the Singaporean market and the requirements imposed on them.

But with the prospect for funding–which will be performance based–and bragging rights for winning the project, the Singaporean project should nonetheless attract significant interest.

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