China Unicom will officially launch its Near Field Communication service later this year in Shanghai, confirms a Shanghai-based official from the nation's second-largest mobile network carrier.

“We are going to launch the service soon, but it will only be used in the subway stations and buses, which have [NFC] terminals installed,” she tells PaymentsSource.

The country's top mobile-network operator and Unicom's biggest rival, China Mobile Ltd., a week ago said it will make RF-SIM, a SIM card-based mobile-payment technology similar to NFC, one of its main product offerings.
Jiang Lixin, analyst at Shanghai-based research firm iResearch Consulting Group, tells PaymentsSource it is difficult to tell which company's technology will gain the most market traction because both have their own obstacles to overcome. “Unicom's NFC standard is compatible with most of the existing terminals, such as the card readers used in the public transportation and identification systems, but it requires specially designed mobile phones,” he says.
Moreover, while the RF-SIM card can replace the conventional SIM card, it has limited compatibility compared with NFC technology, according to Lixin. Also, though users do not have to change their phones, they must pay 120 yuan (US$17.50 or 12.95 euros) for each RF-SIM card.

Both companies allow users to add funds either by buying a recharge card or through transfers from their bank account.

“I don't see either of them being attractive to users currently,” Lixin says, noting the technologies will have to be vastly improved. For example, enabling users to install the NFC chip into their phones would be more convenient than requiring a new phone.

China Mobile will have to invest a lot more than Unicom in providing compatible terminals, Lixin adds.

China had 740 million mobile-phone users as of the end of 2009, up 15.6% from 640 million a year earlier, according to the Chinese Ministry of Industry and Information Technology. “This figure demonstrates a huge market for wireless-payment industry,” says Lixin.
Beijing-based Unicom is the only Chinese mobile-network operator listed on the New York Stock Exchange. It had 140 million users as of the end of June 2009 compared with 493 million for China Mobile. 

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