Korean Telcos Plunge Into Mobile Payment.(Mobile communications payment services details)

Despite looming interoperability problems and an uncertain business case, mobile telcos in South Korea's crowded market plan to give mobile payment its first big tryout. Network operators and banks around the world will be watching.

One of the biggest hypes of the mobile telecom era was the idea that handsets would become veritable mobile-commerce machines, allowing consumers to happily dispense with plastic as they beamed their payment details to welcoming merchants everywhere.

It is not much of an exaggeration to say the extent of true mobile payment today consists of the odd bottle of Coca-Cola purchased from a vending machine somewhere in Finland or Japan or a passenger covering a taxi fare in Germany.

But the mobile operators in South Korea believe they can change all that, and in this hyper-competitive and fast-saturating market, they promise to spend millions doing it. The telcos plan to use either the infrared wavelength, the same one that links couch and television set via a remote control, or radio waves to send credit card transactions between mobile handsets and retail terminals, vending machines, tolling booths and other points of sale. These same devices will exchange transaction receipts and loyalty points.

And that is not all. In a nod to the near ubiquity of contactless electronic payment of transit fares in many Korean cities, the telcos also plan to enable customers to pay bus and subway fares with a wave of the handset, with the fare billed to their credit card accounts. The customers may also be able to make small e-cash purchases in stores.

The transit and likely the e-cash transactions will use radio frequency technology, like the contactless transit smart cards.

All three of the nation's mobile operators and at least one of its planned third-generation providers intend to issue special smart cards for handsets to store the credit card accounts, and, in some cases, the transit/retail e-purse. One operator is even talking about eventually storing driver's license and health insurance ID numbers on the chip.

"We're trying to reach a world where people don't need to bring their wallet," says Yoon Tae-seung, assistant manager for SK Telecom's m-Finance Planning Team.

Ready To Go

SKT, South Korea's No. 1 operator with more than 16 million customers, says it is ready to spend millions on the "Moneta plus" mobile commerce service it plans to launch next month. Among the expenses will be equipping hundreds of thousands of POS terminals over the next couple of years

to handle wireless payments.

Its rival, Korea Telecom Freetel, is set to issue its own mobile commerce smart cards, and, along with credit card company LG Card, has ordered 200,000 cards for delivery before the end of the year. The cards, like those for SKT, will pack dual-interface chips that …