Barriers Slow Down Adoption of RFID Enabled Handsets
For years, mobile telecom operators in Asia have been exploring the concept of 'mobile wallets'. Radio Frequency Identification (RFID) enabled stored-value handsets that could bring them a new revenue stream, particularly in more mature markets where new subscriber growth is tailing off.
In Japan, where NTT DoCoMo has been piloting RFID services in mobile handsets
with the Suica system, consumer response has been lukewarm. Only 2% of East
Japan Railway passengers had used Suica cards as of September 2004. While these
are very initial results and public education needs to be increased, the
response rate has been lower than expected.
The potential of RFID enabled handsets is unlikely to be realized until several key issues are addressed:
Security and phone-renewal
The RFID chip is not part of
the SIM card and as the phone reaches the end of its life-span, this presents
some issues regarding security and transferability of the data.
Managing the transactions
Most operators do not have the
resources or know-how to manage transactions. A third party is needed.
Deployment alongside existing RFID networks
Establishing
services such as public transport payment and small purchases will require the
cooperation of clearing houses, banks and merchants.
Deployment in locations without existing RFID networks
In the future all handsets are likely to have Near Field
Communications (NFC) capabilities. But who will deploy the network of readers
and manage transactions in cities without existing RFID networks? Mobile
operators are unlikely to have the necessary resources, and RFID readers are
costly.
Competition from credit cards and incumbent systems (eg.
public transport) which may attempt to block new players
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