Global Mobile Operators Embrace SIM Cards for Mobile Payments

It's a big week for ISIS, as 45 partners of a GSMA, a mobile operator trade group, have agreed to support ISIS' preferred payments model of choice: near field communication (NFC) that uses the subscriber identity modules (SIM) cards that are installed on mobile phones.

By coalescing around standardized SIM card protocols, the mobile operators are striking a major blow in favor of interoperability to enable international mobile payments. The move also strengthens these operators' collective position to become the dominant tech model, placing them in a prime position against manufacturers, payments firms and other initiatives that are currently fighting to slice up the substantial global mobile payments revenue pie.

"Clearly the battle is being joined as I speak, and the stakes are pretty high, because whoever has control [over the tech model] gets to charge the rent," says Aaron McPherson, a research manager at IDC Financial Insights.

The GSMA, which has members in dozens of countries, recently published a new set of industry specifications for mobile payments. These handset and SIM specifications are designed to enable the development and global deployment of secure, interoperable and ubiquitous SIM-based mobile NFC services. ISIS, an AT&T, T-Mobile and Verizon-led effort to build a mobile commerce network, supports SIM-based NFC.

The GSMA says the other global operators that have decided to support SIM-based NFC include China Mobile and China Unicom, which alone total nearly 800 million connections. Other operators of note to commit to SIM-based NFC include América Móvil, AT&T, AVEA, Axiata, AXIS, Bharti Airtel, Bouygues Telecom, CSL, Deutsche Telekom, Elisa Corporation, Emirates Integrated Telecommunications Company PJSC (du), Etisalat, and Rogers Communications.

SIM cards include the subscriber identity module that stores the international mobile subscriber identity and a key that's used to authenticate subscribers to mobile services. SIM cards, which allow a consumer to easily use a number of different phones (consumers can "activate" different phones by removing the SIM card from one phone and sliding it into another) also include a list of services that the user can access, and passwords.

"It's a power struggle, the carriers all want to be on the SIM card," says Rick Oglesby, a senior analyst at Aite. "That's the part of the device that they control the most."

A number of banks have also been testing microSD-driven mobile payments. And among smartphone manufacturers, Apple is striking back. A patent application that was approved this week suggests Apple is developing tech that would "reverse" the SIM card model by placing the SIM inside the embedded secure element, which puts Apple in control of the unit and cuts operators away from the payments relationship.

McPherson says Google Wallet, one of ISIS' chief rivals in the US, is not explicitly driven by the carriers, and is using a secure element that's embedded in the handset. "That's why it's only connected to [one smartphone on Sprint Nextel], he says. "But that doesn't means Google Wallet couldn't work with a SIM-based secure element."

Oglesby says there are also other tech options to enable mobile payments that could avoid the mobile carrier/operator industry altogether, such as payments firms using cloud computing to enable storage of cardholder data.

Google, which this week folded its Google Checkout into the Google Wallet, did not answer queries for comment by Friday afternoon. ISIS' head of marketing, Jaymee Johnson, issued a statement to BTN saying ISIS "supports SIM-based NFC solutions and we applaud the collaboration of the international community in rallying behind a common set of standards. We believe that such collaboration ultimately benefits consumers and will accelerate a wide scale adoption of NFC-based standards."