45 GSMA Mobile Carriers Throw Their Support Toward SIM-Based NFC

Isis has had a big week, as 45 partners of the GSM Association mobile operator trade group agreed to support the joint venture’s preferred payments model: Near Field Communication that uses SIM cards used in many mobile phones.

By coalescing around standardized SIM card protocols, the mobile operators are striking a major blow in favor of interoperability to enable international mobile payments. The move also strengthens these operators’ collective position to become the dominant technology model, placing them in a prime position against manufacturers, payments firms and other initiatives fighting to slice up the substantial global mobile-payments revenue pie.

“Clearly the battle is being joined as I speak, and the stakes are pretty high because whoever has control [over the tech model] gets to charge the rent,” says Aaron McPherson, a research manager at IDC Financial Insights.

The GSM Association, which has members in dozens of countries, recently published a new set of industry specifications for mobile payments  (see specifications).  The handset and SIM specifications enable the development and global deployment of secure, interoperable and ubiquitous SIM-based mobile NFC services.

Isis, a joint venture between AT&T Mobility, T-Mobile USA and Verizon Wireless, supports SIM-based NFC.

The GSM Association says global operators that have decided to support SIM-based NFC include China Mobile and China Unicom, which alone total nearly 800 million connections. Other operators of note to commit to SIM-based NFC include América Móvil, AT&T, Avea, Axiata, Axis, Bharti Airtel, Bouygues Telecom, CSL, Deutsche Telekom, Elisa Corp., Emirates Integrated Telecommunications Co. PJSC (du), Etisalat, and Rogers Communications.

SIM cards store the international mobile subscriber identity and a key used to authenticate subscribers to mobile services. SIM cards, which allow a consumer to easily use a number of different phones (consumers can “activate” different phones by removing the SIM card from one phone and sliding it into another) also include a list of services the user can access, and passwords.

“It’s a power struggle; the carriers all want to be on the SIM card,” says Rick Oglesby, a senior analyst at Aite. “That’s the part of the device that they control the most.”

Various banks have also been testing microSD chip-driven mobile payments (see story).

And among smartphone manufacturers, Apple Inc. gained some of its own NFC ammunition this week. The U.S. Patent and Trademark Office on Nov. 15 published 31 patents granted to Apple related to NFC technology and what appears to be a new location service that uses the global positioning system (see story).

Apple’s NFC patent covers the sharing of information between different devices, including iPhones, iPads, Mac computers and point-of-sale terminals in retail environments. Apple first increased speculation that it planned to develop an NFC-enabled iPhone with its hiring in August 2010 of former mFoundry executive Benjamin Vigier, who played a key role in developing mobile-payment applications for PayPal Inc. and Starbucks Corp. (see story).

Google Wallet, one of Isis’s chief rivals in the U.S., is not explicitly driven by the carriers, McPherson says. It uses a secure element embedded in the handset.

“That’s why it’s only connected to [one smartphone on Sprint Nextel], he says. “But that doesn’t means Google Wallet couldn’t work with a SIM-based secure element,” he says.

Other tech options can enable mobile payments to avoid the mobile carrier/operator industry altogether, such as payments firms using cloud computing to enable storage of cardholder data, Oglesby says

Google, which this week folded its Google Checkout into the Google Wallet (see story), did not respond to queries for comment by Nov. 18.

Jaymee Johnson, Isis head of marketing, issued a statement saying Isis “supports SIM-based NFC [services], and we applaud the collaboration of the international community in rallying behind a common set of standards. We believe that such collaboration ultimately benefits consumers and will accelerate a wide scale adoption of NFC-based standards.”

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