South Korea: SK Telecom Follows Infrared Payment With Contactless

 

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SeoulSouth Korea
Scope: 
Rollout
Status: 
In progress
Est. Launch: 
Q1 2006
Main Application: 
Ticketing (transit), Payment
Mobile Operator: 
SK Telecom
Mobile Operator: 
KT
Service Provider (application): 
Korea Smart Card Co. (T-money)
Service Provider (application): 
Shinhan Card (Visa payWave) (Earlier, LG Card)
Service Provider (application): 
Merchants: 
400,000-plus terminals (credit payment), 8,000-plus convenience stores and 20,000-plus vending machines (T-money)
Users: 
2 million-plus (mostly T-money)
NFC Handsets: 
Samsung (non-NFC), LG (non-NFC)
TSM*: 
SK Telecom, Shinhan Card
Secure Element: 
SIM
Other Vendors: 
Visa, Cassis International (TSM platform for SK Telecom, Shinhan), SCL (SIM card)

South Korea’s contactless mobile ticketing and payment service uses non-NFC phones packing special 3G SIM cards with a contactless interface. The phones also come with a built-in antenna. The service enables subscribers to download the applications over the mobile network to their SIMs and tap them to pay for fares as well as with thousands of merchant locations equipped with readers refitted from an earlier failed infrared payment project. They can also conduct network-based mobile banking and stock trading with applications stored on the SIMs. Most users who make contactless mobile payments use the T-Money fare-collection application, which is also accepted at convenience stores and vending machines. SK Telecom, South Korea’s largest telco, had tried for three years to push infrared payment on subscribers. Then in 2006 it put payment and transit-ticketing applications on SIM-sized cards for the millions of specially equipped contactless phones it had rolled out. The telco began enabling the download of applications, including T-money transit ticketing and Visa payWave issued by Shinhan Card, to dual-interface 3G SIM cards in 2007. Competing telcos did the same.

NFC Times Take: 

Since 2002, SK Telecom has spent tens of millions of dollars trying to get subscribers to make retail payments with phones–first with infrared phones and readers, then with contactless. It has hoped to earn significant revenue by collecting a very small cut of each retail transaction. But that hasn’t happened; few Korean subscribers tap their phones to pay for purchases. And banks have resisted SKT's moves into their space. The telco in December 2009 reportedly purchased a 49% stake in credit card company Hana Card, supporting its continued forays into mobile financial services. Meanwhile, while mobile credit is not taking off, a substantial number of subscribers do use their contactless phones and those from other South Korean operators with Seoul’s T-money application onboard to cover subway train, bus and taxi fares. Consumers can also use T-money to pay for purchases at 8,300 convenience stores and 21,000 vending machines, according to the Korea Smart Card Co. T-money is still mainly used by 18-million cardholders. None of the contactless-mobile phones complies with NFC, but SK Telecom held a small internal NFC trial in 2006, mainly enabling employees to tap smart posters for content. Rival telco KTF tested NFC-based payment in late 2007 with a MasterCard PayPass application. But neither SKT nor KTF appears likely to try to roll out NFC anytime soon.

 

 

* Trusted Service Manager: Defined loosely to include companies or other organizations securely distributing, provisioning and managing applications, generally over the air, on secure elements in NFC mobile phones; or licensing their platforms for this purpose.

N/A: Not available or not applicable.

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