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February 26, 2009

Singapore launches NFC

They have outlined plans to work with banks, telecom companies and payment processors to set up the infrastructure for contactless mobile transit and payment services.

By Verdict Staff

Authorities in Singapore have announced that they intend to appoint a third party to establish a framework for a standardised and interoperable near field communication (NFC) network across the country. They have outlined plans to work with banks, telecom companies and payment processors to set up the infrastructure for contactless mobile transit and payment services.

The move follows discussions in January, organised by the body set up to promote the telecoms sector in Singapore, the Infocomm Development Authority (IDA). It had invited representatives from 11 organisations including mobile phone operating firms, transport payment card provider EZ Link, and payment providers, as well as government bodies including the Ministry of Finance, the Monetary Authority of Singapore and the Land Transport Authority. They agreed to collaborate on building a unified system through an independent intermediary or a trusted third party to manage the project.

“NFC offers tremendous potential because of the many services it can bring to consumers,” IDA’s CEO Ronnie Tay said. “To realise its fullest potential, IDA sees interoperability as a key success factor for NFC and is pleased that all the roundtable members share the conviction.”

Revenue opportunity

Estimates from IDA claim that the planned development could generate revenues of up to SGD60 million ($39.3 million). It is not yet clear what the initial investment is likely to be, once the trials conclude.

The intermediary, which is to be appointed by next year, will be expected to deliver the programme by facilitating a single point of contact for interested banks, payment providers and telecom firms to deliver requirements efficiently and without duplication of infrastructure while ensuring the trust requirement for payment services.

So far IDA and NFC industry stakeholders have worked closely in the launch of initial promotions, awareness programmes and trials.

It has been IDA’s priority to enable subscribers of any telecom provider to have full access to ‘mobile wallet’ services which they believe will be a major driver of foreign investment in Singapore. The project forms a part of its 10-year ambitious master plan, launched in 2005, which covers several industries.

IDA has always believed that interoperability and co-operation between stakeholders at policy level will spur businesses to deploy NFC services, and its view is backed by research it commissioned payment consultancy Consult Hyperion to carry out. The study, published last year, suggested that standardisation in the industry could help it grow to up to eight times its current projection as a non-interoperable environment.

The country is well-suited to taking on full-scale conversion to the technology as nearly 98 percent of Singaporeans own a mobile phone. The country’s infrastructure and the population’s technological awareness make Singapore especially suited to adapting to new technologies.

Studies have also shown that the country’s existing technological infrastructure is developed enough to allow a plunge into the next generation of mobile payments. This includes all the major Singaporean banks which provide internet banking facilities to their customers.

It is no surprise that the island is hosting the 2009 world summit on mobile payments which brings together the main stakeholders within the industry: members of the mobile industry, banks, transit operators, merchants, handset manufacturers, technology and equipment providers.

Past trials

Last August, a six-month pilot was launched by SingTel, United Overseas Bank and payments provider NETS, which is owned entirely by the country’s banks, where 250 credit cardholders were invited to make payments using their mobile phones for everyday transactions.

The participation was free and participants were loaned Nokia NFC phones. A highlight of the trial was an e-coupon that could be opened on the user’s mobile phone and instantly redeemed on a ‘FlashPay’ reader. A patent by NETS for this feature is, at the moment, pending.

Another trial run by EZ Link was carried out in collaboration with mobile phone service provider StarHub, which introduced commuters to the technology by distributing 2,600 mobile phones to selected candidates. The handsets could be used to pay for public transport, road pricing and parking. The trial was successful as seven in 10 surveyed participants said that they were happy to adopt the new payment mode. With 20,000 acceptance points deployed across the country, the trial was among the largest of its kind in the world.

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