Taiwan turns on mobile payments

Vincent Poulbere/Ovum
24 Sep 2007

Far EasTone Telecommunications (FET), the number three Taiwanese mobile operator, has announced it will launch NFC (near field communication) payment services in Q1 2008 and will start a trial in November 2007.

Named 'Beep 'N Go', the new service is being developed in collaboration with the Taishin Bank and several merchants. Handsets will only be provided by Sagem at launch. At this stage, it is not yet clear whether the service will support Visa's and/or Mastercard's contactless payment services.

Visa has launched a mobile contactless payment trial involving 500 customers of Chunghwa Telecom, the leading Taiwanese mobile operator, Chinatrust Commercial Bank and Nokia.

In addition to payments, the service will enable consumers to receive marketing messages directly into their mobile Visa application providing them with special offers or coupons from merchants. Customers will also be able to get offers by approaching their phones near smart posters embedding NFC tags. There is no information provided about if or when this trial could turn into a commercial service.

FET will use a SIM-centric solution where the payment application is stored in the SIM, while in the Chunghwa Telecom trial it will be embedded in the phone.

Taiwan is set to become the first country in the world offering mobile debit and credit card services based on NFC. Both announcements indicate that Taiwanese operators and banks are prepared to offer mobile contactless payment services on a large scale.

The fact that contactless payment is already available and largely deployed in Taiwan is the main driver behind this early launch. Both Visa and Mastercard offer contactless card services in Taiwan. There is no need to deploy new contactless readers in points of sales specifically for NFC, and consumers are also already familiar with using contactless payments. There are 1.4m Visa contactless cards in Taiwan and 3,000 stores that accept this mode of payment. We'd expect the presence of large contactless infrastructure to also drive NFC deployments in other markets, e.g. transport in Europe or payment in the US.

But despite all this activity, we will still be in the testing period for some time. As with operators going commercial with NFC in Europe, lack of handsets is the key limiting factor with these initiatives. Furthermore, these initiatives remain fragmented, based on partnerships between a single operator and a single bank, and with a different technical implementation for each.

As multiple NFC launches occur in a given country, there is risk that fragmentation creates much confusion for the consumers. The only way forward is to offer bank customers the possibility of subscribing to these mobile payment services irrespective of their mobile operator.

Vincent Poulbereis a principal analyst in Ovum's global consumer practice.

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