Battle of RF-SIM and NFC

RFID-SIM-NFCRecently, China Mobile formally Suspend RF-SIM mobile phone payment project (Mobile Wallet), the project will not be restart within two years for a conservative estimate. This result is a direct contest between China Mobile and China Unionpay, the only domestic credit card organization in China, which they support RF-SIM and NFC (Near Field Communication) separately.

RF-SIM technology led by China Mobile use 2.4 G frequencies, which is not compatible with NFC (13.56MHz frequency) use by China Unionpay. Although China Mobile has the world’s largest mobile phone user group, but It’s too hard for China Mobile’s 2.4G standard to become primary frequency wireless communication technology in Chinese market as UnionPay’s 13.56MHz technology has being widely used by the financial POS, bus, subway, gas stations and more other fields. If China Mobile continues to push 2.4G standard, it means that not only RF-SIM card need to purchase one by one, but also full replacement of POS machines across China. The costs will reach hundreds of millions dollars.

According to the statistics of Chinese Ministry of Industry and Information, China’s mobile phone users reached 780 million in the first quarter. If 40% of Chinese mobile phone users choose the mobile payment service like in Japan and South Korea, China will have more than 300 million users to pay by mobile. Different wireless communication frequency standards will lead to redundant investment and other issues in such huge market. To solve this, the Chinese Ministry of Industry and Technology is to promote a mobile payment standard system. Although the result is unsettled, but the industry view was expressed that, with the suspension of China Mobile’s RF-SIM project, 13.56MHz NFC technology is likely to be the final winner.

It is uncertain that who will become leader in the field of mobile payments in China, but one thing is certain, that no one can dominate the market, only to cooperate together for a bigger cake.