July 3, 2009
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News: Korea Anxious To Eliminate Plastic
The Around the world, the latest and greatest telecommunications technology has cell phone companies rushing to partner up with major credit card companies. The new technology provides wireless consumers with the capability of using their cell phones as a credit card. With the phone, customers are capable of paying virtually any bill where the merchant accepts credit card without the use of plastic. Citi India and Nokia is currently testing their program using the Nokia 6212 model that is embedded with the new technology. Korea is desperately trying to get new technology released for sale to the public. Unfortunately, they have run into some legal and technical roadblocks.
SK Telecom and Korean's largest telephone company, Korea Telecom (KT) has already released its third generation (3G) phones with a Universal Subscriber Identity Module (USIM) smart card that contains all the customer's information. With the USIM chip, credit card companies have the capabilities of downloading the customer's unique card information. SK already has over 10 million 3G customers equipped with the chip. However, wireless operators are only middlemen connecting customers to financial organizations. SK does not have their own financial service unit. Korean regulations restrict non-financial entities from owning financial units that would offer credit cards. The Korean National Assembly is looking at the possibility of easing up on the restrictions which would open the way for SK to partner with Hana Bank in offering their version of the service.
One other issue plaguing SK is that the USIM chip isn't strong enough to support a large geographical range of credit card transactions. There is however, technology that would overcome these limitations, the Near Field Communications (NFC) used in the India Nokia 6212 program. Korea Telecom is currently working on developing an NFC chip with a much larger storage capacity which they expect to release early next year. The only remaining obstacle will be the Korean government's decision whether or not to make the regulations more flexible.