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.

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By GlobalData

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.