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Phone payments for transport clear way for mobile wallets, say analysts

SINGAPORE — The push to enable more commuters to pay transport fares with their mobile phones using Near Field Communication (NFC) technology has potential for mass adoption, given that all they need is a new SIM card and minimal infrastructure, analysts said.

Analysts noted that the take-up rate could be boosted further if those who typically use NFC-linked credit cards for payment make the switch to paying transport fares with their mobile phones. TODAY file photo

Analysts noted that the take-up rate could be boosted further if those who typically use NFC-linked credit cards for payment make the switch to paying transport fares with their mobile phones. TODAY file photo

SINGAPORE — The push to enable more commuters to pay transport fares with their mobile phones using Near Field Communication (NFC) technology has potential for mass adoption, given that all they need is a new SIM card and minimal infrastructure, analysts said.

Nevertheless, the analysts noted that the take-up rate could be boosted further if those who typically use NFC-linked credit cards for payments, or those who have iPhones, are willing to make the switch. And as the market gets bigger, the possibilities for NFC payment become greater.

Associate Professor Ang Swee Hoon at the NUS Business School noted that in Japan, people may buy products from vending machines using their phones and this could be a possibility in Singapore in future. “Singapore is moving in that direction, of not only being a cashless society but also a cardless society.”

Right now, the NFC technology for transport payment is available only on 19 models of Android phones, and all telcos here will start making the NFC SIM cards available in the coming weeks.

SIM University senior lecturer Walter Theseira observed that using NFC does not seem to require any hardware modifications to the existing payment systems on public transport, and commuters may switch to this new payment method quite easily.

He added that the only real cost for consumers is to get new SIM cards from their telcos and possibly some back-end software.

“So it seems quite scalable and there shouldn’t be a big problem from the cost perspective if iPhones are not supported at present,” Dr Theseira said. “Typically, the concern with market size is that a system with high fixed costs needs a large consumer base to spread out the costs.”

Mr Clement Teo, senior analyst at market research firm Forrester, observed that it seems like “the credit card companies are not part of the discussion” in this initiative.

This means that commuters would “lose out” if they want to switch to NFC-compatible phones because they cannot use an NFC-linked credit card to pay for public transport or at retail outlets as they do now, he said.

To date, Apple has restricted access of the NFC chip in newer iPhones solely to its own ApplePay service.

Assistant Professor Hannah Chang from Singapore Management University’s Lee Kong Chian School of Business said it remains unclear whether “the large number of iPhone users in Singapore” would be willing to switch to NFC-compatible (Android) phones just to use NFC technology.

UniSIM Adjunct Associate Professor Park Byung-joon is optimistic that iPhone users may not be excluded for good. Given that the Android community is “quite big as well”, he said, if more of them use this new technology, then iPhone users may “apply pressure to (want) Apple to come onboard”.

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