Grand NFC Korea Alliance

Ten years ago, SK Telecom would carpet bomb Korea with 400,000 terminals ("dongles") to boost its Moneta mobile payment service. Yesterday, Korea Inc. announced 300,000 NFC-enabled Point Of Sales by the end of 2011 to put the country ahead of the pack in this very very strategic sector.

The difference ? This is not a solo act anymore : SKT alone couldn't succeed in setting the new standard in mobile payments at home and pushing the concept overseas, but this time, the whole value chain and ecosystem is following. And if it works, each player will claim a nice slice of a much bigger pie.

Under the regulator's umbrella (KCC, the herald of "NFC-based Mobile Smart Life Services"), over thirty Korean CEOs met at the Seoul Press Center to sign this decisive MOU in Near Field Communications, and if you throw in the members of the recently formed Grand NFC Korea Alliance, you've got the closest thing to a mobile payment dream team :

- all 3 Mobile Network Operators : Korea Telecom, SK Telecom, U+ (LG Telecom)
- the biggest card players around : Visa, MasterCard, Shinan Card, Kookmin Card (KB), Lotte Card, Hyundai Card, T-Money, MNO partners (Hana) SK Card and BC Card (KT)...
- key authorities and associations : KCC, ETRI, TTA, KISA (Korea Internet & Security Agency), MOIBA (Mobile Internet Business Association), RAPA (Korea Radio Promotion Association)...
- top manufacturers : Samsung, LG, Pantech...
- top enablers: UbiVelox, KEBT, MtekVision, 3ALogics Inc, KICC...
- top payment enablers / billing service providers : KSNet Inc, Mobilians, Galaxia, Danal Corp., KCP...

The only players missing on the picture are the endusers.

And as we saw before, pedagogy will be key in a country where hacking happens to be a national pastime (if you include North Korea in the package), where few people protect their handsets with a PIN code, and where distrust in smartphone security keeps spreading like wildfire.

Of course, "Near Field" meaning 10 cm and below, close encounters of the third thief will require more intimacy than via Bluetooth. Besides, many Koreans are already used to contactless micropayments thanks to T-Money (ie Seoul public transportations and taxis, thousands of convenience stores and vending machines...). Furthermore, NFC trials have been under way for quite a while : for instance KT's "Mobile Stamp" couponing system, SKT's Mobile Commerce Zone or Q Store pilots, or cross border trials between SKT's T-Cash and Japan's KDDI and SoftBank...

This MOU aims at multiplying testbeds and giving momentum to the technology, the bulk of the infrastructure being planned for Q4 2011. So where will NFC-based payments be available ? GS group plans to implement them in its convenience stores (GS25) and gas stations (GS Kaltex). Major retailers (Lotte Mart, Emart...) are joining the party. Seoul and Gyeonggi-do buses and subways, as well as many taxis will be converted. A major shopping area for tourists (particularly from Japan), Myeongdong has been identified as a strategic hotspot to feed the buzz.

Needless to say, the number of NFC-enabled handsets is another essential element in the equation. The alliance targets an ambitious 5 M units by the end of the year, leveraging on existing devices (Samsung Galaxy S II and Sky Vega Racer opened the way), and the Google-Apple war : since Android Gingerbread OS supports NFC, Cupertino had to consider it for iPhone 5.

And oh. This non-event : Samsung is expected to surpass soon Nokia as the world's top handset manufacturer.

mot-bile 2011

* sorry, not yet in English : "국내 통신사·금융(카드)사 CEO 최초로 한자리에 모여 NFC 서비스 활성화를 위한 MOU 체결"

SK Telecom's Wild Hana Card

Since their coming out as an item on May 22, SK Telecom and Hana Bank have been advancing on their JV project (Korea's leading MNO taking 49% of Hana Card, the credit card unit of Korea's #4 financial group).

SKT seems to be seizing a great opportunity : Hana is lagging in the card business, and regulations were eased after the crash last autumn : big non financial groups, previously forced out, were ripe with cash. But even without Hana, SKT is not a small player in cards and financial services.

SKT's mother company, SK Group, boasts 30M OK Cashbag card members. The operator's own loyalty card is used by 40% of its 23M customers, and Moneta, its mobile finance / mobile payment platform, is already one of the most advanced on earth : wired and wireless, Mifare contactless payments for subway, hundreds of thousands of dongles across the country, 3G USIM / EMV Over-The-Air, T Cash / Mobile T-money - a partnership with T money... SK Telecom is the closest thing to a bank you can get in the MNO world.

Financially, the partnership could secure the MNO's business model in the long term at the national level, and facilitate the internationalization of its platforms.*

Hana doesn't bring much of a customer base, nor even disruptive solutions, but certainly new marketing opportunities. A more comprehensive understanding of customers would come handily for a mobile leader who tended to loose his fabled mojo.**


* see "SK Telecom's Semestrus Horribilis"
** see "KT-NTT Venture Forum". Well. The integration of Hanaro Telecom by SKT and KTF by KT didn't inspire much both leaders : triple and quad-play promotions badly lack imagination and appeal.