China Mobile is suspending the deployment of its mobile payment system, possibly to switch to a different technology.
The suspended project involved the RFID-SIM, a mobile-payment technology based on the 2.4GHz standard for contactless payment, local media in China reported last week.
However, the company, China's largest mobile-network operator, was unclear about whether it will turn to the 13.56MHz standard used by rival China Unicom and the nation's largest card issuer China UnionPay, though it had indicated it would do so in June.
A flaw of 2.4GHz is that it is incompatible with China UnionPay's more than 2 million point of sale terminals, said Hu Yuanyuan, an analyst with Shanghai iResearch Consulting Group. "In addition, 2.4GHz can be read by the terminal from a longer distance than the 13.56MHz, posing risks in terms of security," she said.
China Mobile is unlikely to give up its RFID-SIM entirely because of the huge investment it made last year, which brought the company about 350,000 2.4GHz mobile payment users, Yuanyuan said.
Also, because NFC technology requires a customized phone or an additional antenna attached on an existing phone, converting entirely would be a huge blow for China Mobile's more than 500 million users in China, Yuanyuan says. "It's more likely that China would have multi-standards for mobile payment," she said.