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Korean Phones to Be PayPass Enabled

SK Telecom will deploy MasterCard's PayPass system in South Korea, enabling customers to use mobile phones to make contactless payments.
By Claire Swedberg
Mar 15, 2005MasterCard and SK Telecom have announced they will deploy the MasterCard PayPass system in South Korea by late 2005. SK Telecom customers will be able to use PayPass chip embedded in their mobile phone to communicate with PayPass readers by "tapping" their phone against or near the reader during a transaction. In South Korea, the readers will also accept PayPass-enabled cards, which will be issued by Korean banks, as well as phones loaded with bank cards.

MasterCard's goal is "to grow our share of the cash market," says Oliver Steeley, the vice president for MasterCard's mobile wireless center of excellence. By offering an easy payment method that allows the consumer to tap a PayPass-enabled phone, payment card or key fob instead of fumble for cash and change, or go through a card swiping, authorization and signature process, MasterCard hopes to gain market share in the "top of the [consumer's] wallet."

MasterCard's Steeley
Details about the participating South Korean merchants are not yet available, says Steeley, who also could not yet state how many PayPass-enabled phones and readers would be deployed.

A PayPass user can make a purchase at a business wherever PayPass readers are installed. When a user holds the PayPass-enabled device such as a phone, card or key fob within 4 centimeters of the reader, the device's embedded RFID chip receives power from the reader and "communication starts to happen," Steeley says. First, the chip and reader communicate to read the encrypted card data. This transaction takes less than 200 milliseconds. The PayPass reader will beep to verify that the communication between the card and the device was successful. Next, the information is sent to the issuing bank to check the validity of the credit card account number and, in the case of a debit card, make sure the account holder has sufficient funds. The transaction is then listed on the cardholder's monthly statement.

The contactless system offers more than what is commonly thought of as RFID systems, Steeley says, because it goes beyond identifying serial numbers, and instead can process multiple pieces of information from each PayPass-enabled device similar to a card-swipe credit card transaction. In the case of PayPass, Steeley says, readers are able to talk to the chip in the device, take results of the transaction and process the information into the appropriate format to be sent to the MasterCard network. PayPass purchases then appear on the user's monthly credit or debit card statement.

MasterCard first deployment of the PayPass system was a six-month pilot in Orlando, Fla., in 2003 (see MasterCard to Test RFID Card). In late 2004, PayPass readers were deployed at McDonald's restaurants in various parts of the United States, beginning in Dallas and the greater New York City area, and could eventually be located at fast-food restaurants, gas stations, drug stores, supermarkets, movie theaters and other places where commercial transactions consist of small purchases paid for mainly with cash or debit cards.

MasterCard is also establishing a PayPass system for the Seattle Seahawks and Baltimore Ravens Football Clubs to incorporate the contactless payment technology into the MBNA Seahawks and MBNA Ravens Extra Points credit card programs. (See MasterCard PayPass Beefs Up NFL Line .)

PayPass-enabled NFL Extra Points MasterCard credit cards for some NFL teams are being made available through the MBNA Web site, www.mbna.com, Steeley says, and also will be mailed to some MasterCard holders this year, depending on the bank. The MasterCard account holders will receive a card with a PayPass 13.56 MHz RFID transponder that complies with ISO 14443-A and ISO 14443-B standards.

MasterCard also has trials of the PayPass system underway involving the country's transit authority in seven cities in southern Taiwan. In that case, OneSMART PayPass Chip Combi Cards were issued to mass transit users to pay for their transportation. Several small trials of PayPass key fobs are underway in the U.S. for MasterCard account holders.
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