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Chinese consortium chases NFC business mode

If they can't do it, no one can

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Eighteen banks, two national network operators and a handful of handset manufacturers have joined forces in the attempt to find a business model that will make NFC pay.

The Mobile Payment Industry Alliance includes manufacturers like Lenovo, operators including China Mobile, banks such as the Bank of Communications and the Construction Bank of China, as well as an assortment of terminal and infrastructure providers. That combination probably offers the very best chance of making Near Field Communications into a viable technology, even if some of the partners have been playing away lately.

Chief amongst those is China Mobile, who recently ordered three million SIMs embedded with the competing RF SIM technology. RF SIM can provide the same cash-replacement capability, but without requiring special handsets, so is attractive. But when your customer base is more than half a billion three million isn't as much of a commitment as it first appears. China mobile might be hedging its bets, but it's not given up on NFC.

Nokia is obviously involved in the new Alliance: no company has more invested in NFC than Nokia, without whom the technology would have curled up and died years ago. Other than Nokia the only thing keeping NFC alive is the success of Japan's FeliCa technology, which has always provided a model of how proximity payments ought to work.

But FeliCa has a huge advantage in being owned, end to end, by one company. DoCoMo developed FeliCa in conjunction with Sony, and delivers FeliCa handsets pre-installed with the EDY stored-payment system from BitWallet (also developed by DoCoMo). Other operators sell FeliCa-equipped handsets, but DoCoMo runs the show, and these days it even offers its own plastic credit card just to demonstrate its links to the banking system.

Owning every part of the value chain is the best way to make money out of it, but such vertical monopolies are rare so consortia are the only feasible approach. The Chinese mobile market is expanding rapidly and it's an ideal time to get a standard payment technology integrated into the experience - put proximity payments into a customer's first cell phone and they'll expect it from then on.

If the partners can agree on standards, and resist the temptation to stab each other in the back, then China could be the cradle for NFC. But even with so many names and so many customers it's still hard to believe it will happen. ®

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