The three mobile network operators are to move away from the non-NFC mobile contactless technologies they currently support in favour of an NFC standard solution.
Korean mobile network operator SK Telecom and Japanese operators KDDI and Softbank Mobile have signed a memorandum of understanding that will see the three companies working together to switch from their existing non-NFC standard mobile contactless services to an NFC standard approach.
Japan and Korea are the current world leaders when it comes to providing consumers with mobile contactless payments services. KDDI and Softbank Mobile currently participate in the widely used Osaifu-Keitai service, developed by rival operator NTT DoCoMo and based on Sony's FeliCa technology. SK Telecom currently has 3.28 million users of its mobile payments service, developed in-house.
Both technologies enable consumers to use their mobile phone to make payments in stores and on public transport but are incompatible with each other and do not include tag reading functionality — a key driver of the three operators' decision to move to NFC.
Now the three carriers plan to use NFC technology to develop a range of compatible mobile payments, customer loyalty and promotions services that can be used by customers of all three operators in both Japan and Korea.
"Customers will be able to enjoy easy and convenient payment and additional services such as coupon benefits seamlessly without the need of renting and changing phones when visiting each other's country," says SK Telecom. "When the NFC- based payment system roll-out is completed, NFC phone users in Korea and Japan will be able to make mobile transactions after a simple downloading of a mobile payment application to their phones."
"Various services — mobile coupons, membership discounts and mobile gift vouchers — already in use in Korean and Japanese markets will also be available via NFC handsets," the operator adds. "Customers will be able to seamlessly use the convenient payment service as well as additional mobile services without any service interruptions or geographical limitations."
While Korea already has an installed base of 25,000 contactless card terminals that are compatible with NFC phones, the switch to NFC in Japan will require retailers to install new payments terminals that meet NFC and contactless card standards. And the key to the success of that is likely to lie with how NTT DoCoMo reacts to the news that KDDI and Softbank are to defect from Osaifu-Keitai. The operator has already developed an NFC standard service offering, which it has been demonstrating at industry events for several years, but is yet to announce any move towards introducing NFC services commercially in Japan.
KDDI announced a major NFC trial in April, with an impressive list of partners including Toyota, All Nippon Airways (ANA) and Japan Airlines (JAL), Hitachi, various card issuers — and NTT Data.
SK Telecom, meanwhile, introduced a next generation service called T Smart Pay in March. The new service enables customers to store up to eight credit cards in their mobile phones, as well as up to 30 membership/point/mileage cards and 50 coupons and is expected to form the foundation of the new NFC services offered by KDDI, Softbank and SK Telecom.
"It is encouraging that mobile carriers of Korea and Japan have joined hands to promote mobile payment business," says Hong Sung Chul, executive vice president and head of service division of SK Telecom. "We hope this cooperation can become a strong springboard for boosting the overseas growth of SK Telecom's comprehensive mobile payment service, T Smart Pay, starting with the Japan market."