China Mobile takes SIM card route to e-wallets

SHANGHAI, China – With the tech world abuzz about whether Apple’s iPhone 5 will include a near-field communications (NFC) capability, China Mobile is pursuing a “China-style” e-wallet solution for mobile handsets: using a SIM card to embed RFID technology into a mobile handset.

Compared to NFC-embedded mobile handsets, the SIM card-based proximity payment solution, will cost less and is friendlier to both users and operators. It also promises faster-to-implement e-wallet applications for the masses. “There is no need for consumers to buy a new NFC phone, they can just replace their SIM card,” said Min Hao, executive chairman of Quanray Electronics.

Quanray, a RFID startup based here, has been a key player behind China Mobile’s proximity payment initiative. Others Chinese partners include Watchdata and NationZ.

China Mobile’s SIM card-based mobile payment initiative isn’t new. The mobile operator has been pushing the idea since 2009.

However, because the SIM card sits right behind the phone's battery, it hasn’t been easy for RFID chip companies to overcome signal attenuation problems caused by the battery. NationZ got around the problem by going to a higher frequency (NationZ used a 2.4-GHz SIM card instead of a 13.56-MHz card). Watchdata solved it by running a wire to connect a SIM card with the antenna.

Hao (left) said going to a higher frequency would be problematic since SIM cards would not be able to talk to the more than 100,000 RFID readers already used in Shanghai Metro's mass transit system. Running the wire to connect a SIM card with an antenna, as Watchdata has done, makes the card more fragile, he added.

To overcome such limitations, Quanray created a patented hardware approach that can “penetrate the battery,” Hao said. Further, because it's based on a 13.56- MHz SIM card, it can “leverage the existing infrastructure” to create additional mobile contactless payment features. Quanray’s solution offers a bridge to connect readers and SIM cards.

“The bridge is passive so that it functions without [a] battery, and it can wirelessly communicate with SIM and reader,” Hao explained. The bridge can be placed either at the phone’s battery cover or atop the reader. “Currently, our users are placing the bridge at the reader side [just like a sticker], so that a mobile user can simply replace his SIM card,” he added.


How does it stack up?

When comparing an NFC-integrated phone with a SIM card solution, the performance of the NFC-embedded phone “will be better because of the large antenna,” Hao said. Applications also will be broader since “an NFC phone can work at tag mode, reader mode and P2P mode. But a SIM-based NFC can only work at tag mode.”

That said, SIM card solutions will work for such applications as payment, ticketing, identity and access.

The NFC SIM card also will work with existing phones, with transaction security controlled by the SIM card instead of the phone. The approach uses existing infrastructures (ISO 14443) in application systems, while it updates, downloads, enables and disables operation over the air, according to Quanray.