Shanghai takes pole position in China’s NFC race

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The Chinese city of Shanghai is well known as one of Asia’s leading high-tech bases, so there’s no surprise that it has also made quite an impression with its contactless implementations.

Contactless and mobile have featured strongly in the city, with China’s leading mobile operators jockeying for prime position in the NFC race.

Back in 2006, bank card association China UnionPay and No. 1 Yaohan Department Store held a contactless loyalty trial. The scheme enabled around 50 participants to use a Nokia 3220 handset to download a loyalty application over the air. They could then tap the phone at the POS to redeem loyalty points.

Building on this pilot, China UnionPay was among a group of companies – which also included Industrial and Commercial Bank of China, Bank of China, Bank of Communications, Industrial Bank and Shenzhen Development Bank – to begin a payments trial in Shanghai in 2008. Around 800 participants could use Nokia 6131 handsets at an estimated 300 retail terminals citywide.

And in March 2010, China UnionPay rolled out NFC pilots in a number of Chinese cities and provinces including Shanghai. Participants could use their NFC devices for mobile credit card bill payment, top-ups, utility bill payment, online shopping and hotel and airline reservations. In Shanghai, close to 6,000 merchant terminals were reportedly equipped to support these NFC-based contactless payments.

In 2009, mobile operator China Unicom’s Shanghai branch started marketing an NFC phone manufactured by HEDY that was preloaded with a contactless transit application for the city’s subway, bus and taxi system. More than 10,000 handsets have been sold so far. This rollout built on the company’s earlier mobile ticketing trial in the city.

Moving into 2010, China Unicom and Shanghai Municipal Publicity Department signed a framework agreement to provide customers with a host of services, including NFC-enabled mobile payment.

Another big mobile operator, China Mobile, has been responsible for some impressive implementations. It has rolled out contactless SIM cards in a number of cities nationwide, including Shanghai. These can be used for payments, transit fares and ticketing at sports and entertainment venues. The technology was also showcased at the World Expo in Shanghai in May 2010. Numerous merchants in the city, including McDonald’s and Starbucks, now accept contactless payment.

The World Expo 2010 marked an important stage in the widespread adoption and use of contactless in Shanghai, giving users the ability to tap their NFC-enabled phones at merchant terminals in the expo park and elsewhere in the city for low-value payments. In addition to China Mobile, companies involved in this scheme included the Expo 2010 organizers, People’s Bank of China and Shanghai Fudan plus a host of supermarkets, convenience stores, fast food restaurants and movie theatres.

The telecoms firm has now bought a stake in Shanghai Pudong Development (SPD) Bank, giving it a foothold in the banking sector – a growing trend among operators.

The technology has also made progress in the event ticketing market. In 2006, entrance tickets for the Men’s Tennis Masters Cup at Shanghai’s Qizhong Tennis Center used contactless technology from NXP. An estimated 120,000 tickets were issued for the tournament.

Another market where contactless is making inroads is access control. For example, the Bank of East Asia Finance Building in Shanghai’s financial centre of Lujiazui has deployed a contactless access control system at around 400 locations throughout its offices and public areas.

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