Categories: Capital Markets

DoCoMo, KT announce NFC venture

DoCoMo, KT announce NFC venture

The nascent near field communication space received a much needed jolt today as Japanese telecom giant NTT DoCoMo Inc. (DCM) announced an agreement with Korean operator KT Corp. (KT) to use the wireless technology to develop “cross-border services for mobile payments, mass-transit ticketing, promotional coupons, etc.”
The companies said they plan to launch commercial services using NFC in their respective markets in late 2012.
DoCoMo and KT noted their Business & Technology Cooperation Committee will work on developing common NFC specifications to be incorporated into devices, networks and billing platforms. The hope is to allow customers traveling between Japan and South Korea access to the services using compatible devices running Google Inc.’s Android operating system and contactless IC chips.
Both companies have a history in the contactless payment space. DoCoMo has been offering its NFC-based Osaifu-Keitai mobile-wallet services in Japan since 2004, while KT has been operating a post-paid mass transit service in South Korea since 2002.
DoCoMo said that in support of its initiative it has formed agreements with payment technology companies, including Visa Inc.; NFC chip and mobile handset manufacturers, including Samsung Electronics Co. Ltd. and SIM card vendor Gemalto N.V.; and with Sumitomo Mitsui Card Co. Ltd. and BitWallet Inc. for cross-border services.
To further support interoperability, DoCoMo said it plans to submit an outline of the common specifications to global industry associations and standardization bodies, such as the GSM Association. The carrier plans to demonstrate the NFC initiative at next week’s Mobile World Congress event in Barcelona, Spain.
While the mobile payment space has so far failed to catch on in most markets, analysts have begun to see the market gaining a foothold.
In-Stat noted in a recent report that operators, handset makers and the banking industry has finally begun to seriously get behind the effort, which could lead to broader adoption.
“All of these efforts are great, but they will need the support of retailers and consumers for mobile payments to be successful,” the firm noted in a report. “The big question going forward is whether retailers and consumers will have enough incentive to adopt a new payment system. For retailers, this transition is likely to cost them a significant amount to install NFC point-of-sale terminals, which is a difficult commitment to make, particularly in a down economy. From a consumer perspective, for most in developed countries, there is little need for a new payment system – with credit and debit cards in addition to other payment options widely available, what benefit will mobile payments bring? These are the key questions that mobile operators promoting mobile payments must address for the service to become a success.”

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