While Sony Corp. is scaling back its global smartphone ambitions, the company still wants to contend with Apple Inc. and Samsung Electronics Co. on mobile payments in Asia. Its method for getting there is public transportation.
Sony is trying to make its FeliCa contactless payment technology as ubiquitous in the rest of Asia as it is on Japan's railway network. The system uses chips that can be embedded in smartphones and wallet-sized plastic cards, and Sony wants to expand their use in Southeast Asia, starting with an Indonesia train system by March.
Transit networks can be a springboard for attracting merchants into the FeliCa system, as a wide commuter base encourages retailers in train stations or bus depots to participate, said Kazuyuki Sakamoto, a Sony senior general manager in charge of FeliCa operations. The potential market is huge: Southeast Asia needs to spend $60 billion annually on roads, rails and other infrastructure, according to the Asian Development Bank.
"Our approach is different from Apple's," Sakamoto said in an interview. "Without real-life situations where the payments can be used, it doesn't matter how many handsets you have out there."
Hong Kong's Octopus system for payments in trains, buses and convenience stores already uses Sony chips, as do the Pasmo and Suica railway cards in Japan.
"Apple Pay and the like are now getting started overseas, but we've been offering this service for more than 10 years," Sakamoto said. "Start with railway passes, then progress to merchants."
The company plans to make FeliCa easier to adopt. The platform, which would only work in a smartphone with a custom chip, may be embedded as software on common semiconductors as early as next year, Sakamoto said.
Sony, which once envisioned being a top three smartphone maker, has since cut jobs and models to focus on components. If FeliCa takes off, it can sell not only chips but also cards and card readers.
The challenge is in uniting the payments chain: manufacturers, financial companies and merchants. Mobile payments adoption has been anemic so far.
Mobile payments in Asia use a mishmash of technologies as providers try to work around such challenges as low penetration of smartphones or bank cards. Samsung is relying on the ability of its phones to be scanned by existing magnetic-stripe readers. Square Inc. distributes card-reading dongles. China's Alipay lets users pay through bar codes.
FeliCa, which stands for Felicity Card, uses near-field communication technology similar to that found in iPhones and Samsung devices. Its chips for plastic cards and phones can be loaded with cash to buy anything from gasoline and karaoke sessions to milk from a convenience store and fast-food lunches. There are 890 million chips in use, though Sony doesn't say how many are found in mobile devices.
The key to adoption at home has been a venture with NTT Docomo Inc. and East Japan Railway Co., Japan's biggest railroad operator. Sony is now trying to replicate that model by teaming up with PT KAI Commuter Jabodetabek, a Jakarta rail company. On Thursday, Sony said it will tie up with PT Telekomunikasi Indonesia, a $20 billion company, to allow payments of bus fares in Bandung with smartphones before taking FeliCa to shops.
Vietnam may be next, Sakamoto said. FeliCa runs a pilot with a Hanoi bus operator after the Japanese government distributed 200,000 cards as part of development aid.
"In Asia, transit plays a more important role," said Mario Manabe, president of Sony's venture. "In the U.S., it's only in the top five cities, so the perspective is very different."