China's largest mobile-network operator China Mobile is suspending its project involving an RFID-SIM, a mobile-payment technology based on the 2.4GHz standard for contactless payment, local media in China reported last week.

However, the company was unclear whether it will turn to the 13.56MHz standard for Near Field Communication technology its rival China Unicom and the nation's largest card issuer China UnionPay use, though it had indicated it would do so in June (see story).

A key flaw of the 2.4GHz standard is that it is not compatible with the more than 2 million point-of-sale terminals China UnionPay operates in the country, Hu Yuanyuan, an analyst with consulting firm Shanghai iResearch Consulting Group, tells PaymentsSource. “In addition, 2.4GHz can be read by the terminal from a longer distance than the 13.56MHz, posing risks in terms of security,” she adds.

But China Mobile is unlikely to give up its RFID-SIM entirely because of the huge investment it made in its nationwide promotion last year, which brought the company about 350,000 2.4GHz mobile-payment users, Yuanyuan says.

Also, because NFC technology requires a customized phone or an additional antenna attached on an existing phone, converting entirely would be a huge blow for China Mobile's more than 500 million users in China, Yuanyuan says. “It’s more likely that China would have multi-standards for mobile payment,” she adds.

China Mobile, China Unicom and China Telecom, China’s top three telecommunication operators, together with China UnionPay and the People's Bank of China, have had recent discussions about mobile-payment standards recently, but no clear decision has yet been reached.

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