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Secure Transactions News

RF-SIM to be halted?

Thursday 10 June 2010

The country's largest wireless carrier, China Mobile, is indicating it will suspend deployment of a proprietary system based on a standalone 2.4 GHz RF-SIM card. Its rival, China Unicom, has NFC, which runs on the 13.56 MHz frequency, and starts to market it extensively through the expansion of its Shanghai trial (cf. Smart Insights Weekly #10-09). The third operator, China Telecom has started developments based on Watchdata’s SIMpass, starting with a pilot in Jiangsu province (cf. SIW #10-21).

The standalone RF-SIM card makes it easier for subscribers to start using the system as all that is needed is to change the SIM card, not an entire phone. But there is some dispute over the frequency of use, since 2.4GHz is more susceptible to interference because it lies in the unlicensed band where Wi-Fi also operates. At first, China Mobile was 100% supportive of RF-SIM, and we heard of an intention from China Mobile to purchase 3 to 10 million RF-SIMs for CNY 100 (EUR 12.24) each. Then in March 2010, we learnt that China Mobile project evolved to support both RF-SIM and NFC (cf. SIW #10-15), and more recently, China Mobile was putting NFC forward rather than RF-SIM (cf. SIW #10-17), and said it only purchased 1 million of them. Reportedly, China Mobile already spent more than CNY 100 million (EUR 12.24 million) buying the first batch of 1 million RF-SIM cards during the Q1/2010, and local media estimate it would have to invest another CNY 400 million (EUR 49 million) to buy cards and to deploy exclusive RF-SIM point-of-sale terminals throughout the nation.

Recently, when China UnionPay started its m-payment alliance, including 18 banks, and other vendors, it partnered with China Unicom, and China Telecom, but not with China Mobile as the mobile communication leader was supporting its proprietary RF-SIM technology. Now, China's main technology regulator, the Ministry of Industry and Information Technology (MIIT), appears to be behind the surprise move to pick one technology, with an objective to avoid fracturing the mobile payment market.

China's fast-growing debit-card market and point-of-sale terminal infrastructure also adds pressure to the regulator to ensure that newly deployed terminals are compatible with mobile payment technology.

Suspending the RF-SIM system would be a major blow to China Mobile. The state-run company has reportedly already purchased 1 million RF-SIM cards and has issued them for use in places like the 2010 World Expo in Shanghai (cf. SIW #10-07). It has also ordered 10,000 to 15,000 terminals to read the cards, but has yet to deploy all of them. The original RF-SIM chip supplies come from Nationz Technologies, where the business generated a sales revenue of CNY 51.65 million (EUR 6.3 million) for the company already in 2009. Nationz Technologies, originated in May 2000 under the name of ZTEIC Design Co. and was renamed Nationz Technologies in June 2009. The headquarters are located in Shenzhen with research and development centers and customer service offices in Beijing and Shanghai. Nationz focuses upon information security, system-on-chip (SOC), and radio frequency (RF) technologies as its technological core. ZTE owns 26.67% of Nationz Technologies.