China Mobile joins e-money body

PUBLISHED : Wednesday, 14 February, 2007, 12:00am
UPDATED : Wednesday, 14 February, 2007, 12:00am

China Mobile, the world's largest cellular network operator, has joined a group of its industry peers to lead a worldwide programme to extend the use of mobile phones for payments at any point of sale.

The 'Pay-Buy Mobile' initiative was launched on Tuesday with 14 mobile operators - representing more than 900 million subscribers - by the GSM Association, the international trade organisation for GSM-standard cellular service providers, at its annual global conference in Barcelona.

'The mobile phone is now becoming an essential life management tool for mobile users,' said Rob Conway, chief executive at the GSM Association. 'By bringing payment capability into the device, users will benefit from the ability to purchase items in a secure and convenient way from the comfort of their own mobile phones, hailing an end to bulky wallets full of notes and coins.'

With the Pay-Buy Mobile setup, operators will seek to define a common global experience for mobile phone payments, on which seamlessly interoperable services will be provided.

The 14 operators participating in that initiative are China Mobile; Cingular Wireless, part of AT&T; Kall, in the Faroe Islands in northern Europe; South Korea's KTF; MCI; MTN in Nigeria; NTT DoCoMo of Japan; Canada's Rogers Wireless; Smart Communications in the Philippines; Norway's Telenor, TeliaSonera in Sweden and Finland; Telecom Italia; Turkcell; and Vimpelcom in Russia.

China Mobile has about 300 million subscribers on the mainland, making it the world's largest mobile network operator. It is poised to extend its reach in Pakistan, where it recently agreed to buy 88 per cent of mobile operator Paktel for US$284 million.

The GSM Association said it was important to define a common global approach to enabling Near Field Communications (NFC), the technology used to link mobile devices with payment and contactless systems.

By embedding mobile contactless services, such as credit and debit payments, in the subscriber identity module (SIM) card the mobile industry will extend the role of mobile phones in their users' everyday lives.

The first phase of the GSM Association's initiative will begin with a business model analysis, followed by an end-to-end trial in South Korea later this year. This trial will be led by KTF and will include all key participants in the value chain, from banks and credit card providers to retail organisations and handset manufacturers.

'We are delighted to work with the GSM Association through our sponsoring and leading of the M-Payment project and a trial in Korea that will help to define and shape the environment for M-Payments using contactless technology in the international mobile community,' said Cho Young-chu, chief executive at KTF.

LG Electronics will provide handsets for this initial trial in South Korea. KTF will share the results of its trial with the association's operator community as part of the programme. Following this, similar trials will be deployed involving other operators and financial institutions.

'Mobiles phone will connect the service and the end-user,' said Kwak Woo-young, vice-president at LG Electronics' mobile handset research and development centre.

Mobile phone-based transactions have already become commonplace in Korea, where there are already more than 12 million mobile payment enabled handsets in circulation - with 80,000 terminal payment machines in shops, restaurants and cafes.

Whilst various forms of mobile payment trials and services have been announced in the industry, the Pay-Buy Mobile initiative is the first truly global approach to facilitate payment by mobile.

Secure, transparent mobile payments will be made using a SIM / Universal Integrated Circuit Card (UICC) card in mobile phones plus contactless/NFC technology. The result will be an interoperable and transparent service for mobile customers, financials institutions and the banks.

This approach will further accelerate the efforts of the leading credit card companies, which developed the specifications to ensure global interoperability between chip cards and point-of-sales terminals, regardless of manufacturer, the financial institution and location of transaction.

'By combining credit/debit card technology with the security level represented by a SIM card and Near Field Communications technology, we can make it really easy to use a mobile phone as a payment device,' said Stein Hansen, head of group technology at Telenor and chairman of the GSM Association's executive management committee.

The association said it intended to work closely with leading financial intermediaries to provide the transaction solutions.

'MasterCard has long recognised the global opportunity presented by mobile commerce,' said Art Kranzley, group executive for advanced payments at MasterCard Worldwide. 'The mobile phone has become a ubiquitous and highly functional device, serving consumer needs well beyond making and receiving calls. Making simple everyday payments with it represents a natural next step, and MasterCard is proud to help make this possible.'

The GSM Association represents around 700 GSM mobile phone operators across 217 markets worldwide. In addition, more than 180 manufacturers and suppliers support the association's initiatives as key partners. The association's members serve more than two billion customers, or 82 per cent of the world's mobile phone users.