Five banks in Taiwan are expected to receive approval from regulators by next month that would allow them to issue mobile credit cards that could be downloaded over the air to SIM cards in NFC phones.
An announcement of a pilot or commercial launch by at least one of the large banks and Taiwan’s largest telco, Chunghwa Telecom, of NFC mobile payments is expected soon. The credit card application on the SIM will probably support MasterCard PayPass.
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 next month.
The bank planning to launch NFC payments first is probably Cathay United, which has participated in trials of NFC and bridge technologies in the past, including with Chunghwa Telecom.
An official with Taiwan’s banking regulator, the Financial Supervisory Commission, reportedly said last week that besides Cathay United, four other major Taiwanese banks, Chinatrust Commercial Bank, Taishin International Bank, Taipei Fubon Commercial Bank and E.Sun Commercial Bank, are expected to be approved to put credit cards on SIMs, most supported by over-the-air downloads and management by a trusted service manager, or TSM. Fubon might not use the Chunghwa Telecom TSM service.
The TSM apparently approved is one run by Chunghwa Telecom itself. The telco’s TSM has already been certified by MasterCard for downloading and managing PayPass applications in NFC phones.
Some of the same banks along with Chunghwa Telecom are also interested in introducing QR-code based mobile payment for both e-commerce, such as scanning QR codes shown on the screen during TV shopping programs, as well as paying taxi fares and, according to reports, “paying bills” at convenience stores and restaurants by scanning a code at the point of sale. It's not clear whether it would also include making purchases in physical stores.
E.Sun has reportedly already gotten approval by the banking regulator, with Cathay United, Yuanta Commercial Bank, Chinatrust and Cosmos Bank also expressing interest. The QR code transactions would use a third-party payments platform.
The Financial Supervisory Commission has taken a cautious approach to mobile payment and up until now has denied permission for over-the-air downloads of payment applications onto secure elements in NFC phones or bridge technologies. It also has restricted maximum transaction amounts. The agency, however, approved new regulations in January governing the security and management of mobile credit cards.
This would “clear a path for launch of more mobile-payment services,” said Jason Kuo, managing director of Taiwan-based mobile-commerce company Mobility Life Technology. He credited the opening up of the market for mobile payments in part to support by government minister Chang San-Cheng, a former vice president for Taiwan-based device maker Acer and former director of hardware operations in Asia for Google. Among Chang's duties is overseeing science and technology policy in Taiwan.
Taiwan, with a relatively high penetration of contactless terminals and interest in NFC by telcos and banks, is seen as a budding hotspot for NFC commercial launches.
There are more than 20,000 terminals that support PayPass and Visa payWave in Taiwan, along with a little used contactless application from Japan’s JCB. And Taipei-based EasyCard Corp. runs a closed-loop transit fare collection and retail payment scheme accepted at points throughout the island nation, including 30,000 terminals in convenience stores and at other retail locations.
In addition, Taiwan’s three major mobile operators, Chunghwa Telecom, Taiwan Mobile and Far EasTone; two smaller telcos, Vibo Telecom and Asia Pacific Telecom; along with EasyCard, have together invested at least NT$150 million (US$5 million)–at least NT$25 million each–in a joint venture to build an NFC payments platform. The initial investment is reported to be NT$180 million.
The joint venture partners will invest more later and are required to bring in other parties. Taiwan’s Fair Trade Commission, in a decision announced in January, approved the joint venture among the six parties, but with conditions. They include reducing the share of ownership of the telcos and EasyCard over time and keeping the system open to other secure elements besides SIM cards.
One of the major objectives of the joint venture is to hire a TSM to manage NFC applications enabled by the parties. The venture isn’t expected to launch any projects until 2014.
But some members of the joint venture, such as Chunghwa Telecom, are not expected to wait for the venture to become operational before launching NFC services.
Chunghwa plans an NFC launch with as many as nine NFC-enabled devices from Samsung, HTC, Sony and perhaps others. One or more banks are expected to offer payment services. EasyCard, which has participated with Chunghwa Telecom in NFC trials in the past, could also offer services. But EasyCard, which uses a stored-value e-purse, would not be covered by Financial Supervisory Commission’s approvals for mobile credit card issuers. So any EasyCard application would have to be preloaded on Chunghwa SIM cards or other secure elements.
Taiwan Mobile is also expected to launch NFC payments, probably with Fubon bank, said a source. The Fubon payment application would have to be preloaded onto Taiwan Mobile SIMs, as well, since the telco does not have an approved TSM.