Product/Service: Mobile Payments (USIM)

Product/Service: Mobile Payments (USIM)
Country to bring in to: Kuala Lumpur, Malaysia
Subscriber identity module or subscriber identification module (SIM) is an integrated chip that is intended to securely store the international mobile subscriber identity (IMSI) and its related key, which are used to identify and authenticate subscribers on mobile telephony devices.
It is similar to contactless payments already used in various country such as Japan and Singapore with the latter being the first to pioneer and push the technology island wide at several entities such as cafes, convenience stores and the public transport system. Although similar to the Touch-n-Go system Malaysia uses, the technology used by the South Koreans Universal Subscriber Identity Module (USIM) utilizes a small part of the SIM found in mobile phones which is able to transmit data at a low frequency securely.
A USIM provides enhanced security features compared to SIM making it a suitable part for electronic payments. The advent of USIM which is dubbed as the next generation SIM cards includes Near Field Communication (NFC) and more advanced applications such as messaging and calendar back-up, banking and access control. Users would be able to register multiple bank accounts to a single USIM chip. With USIM being able to store user information, authentication information and provide users with extra storage space, consumers in South Korea have long been able to make cash withdrawals simply by touching their phones to any of the 39000 ATMs nationwide. Of course, a password is still needed to secure the transactions, however with the launch of Apple Pay and Samsung Pay, companies are moving towards gearing these 2 complementary products together to one unified product.
The Korean economy is now worth US$1.8 trillion (PPP) in GDP, with a per capita annual income of $32,000 and growth of 2.1%. Because of this, the Korean payments market is booming with annual credit card issuing revenues of $14 billion and non-cash transaction growth of 12.2%. Mobile payments as well is on the move. Already more than 60 banks and retails signed up for Korean mobile service-Korea Telecom’s MoCa, which combines payment cards, coupons and offers stored in the cloud with a mobile wallet app that allows consumers to make payments at merchants via traditional barcodes, QR codes or NFC. This is a renewed push in the face of increasing competition from outside the financial services sector, such as KakaoTalk which launched a new payment solution this year, in collaboration with nine credit card firms, to allow its 120 million users to pay using only their password.
Nimbleness is now the name of the game in payments. In the new market, no one can ensure a victory for a traditional powerhouse. It all depends on creative and novel ideas, competition and cooperation way beyond the boundary of friends and foes, and adjustments to a new type of competition. Not only does Apple Pay reduce clutter on an individual daily life but it also brings along added security features such as the addition of a two-factor authentication. The service let Apple devices wirelessly communicate with point of sale systems using a Near Field communication (NFC) antenna, a “dedicated chip that stores encrypted payment information” (known as the secure element) which incorporates Apple’s proprietary Touch ID. This service keeps customer payment information private from the retailer, and creates a “random dynamic security code generated for each transaction.” Additionally, Apple does not track usage, which would stay between the users, vendors and the banks only as the credentials would only be stored within the user’s devices.
To pay at the point of sale, users hold their authenticated Apple device to the point of sale system. iPhone users authenticate by holding their fingerprint to the phone Touch ID sensor. This form of authentication brings about additional security as an individual fingerprint cannot be replicated by others with the Touch ID technology. The technology has the ability to read between sub-epidermal layer skin layer with a fingerprint recognition feature built of laser-cut sapphire crystal, which does not scratch. The CMOS sensor found within the Touch ID module uses capacitive touch to detect and read the user’s fingerprint orientated at any direction.
I decided on the topic of mobile payment and digital wallet system as I strongly believe in the rampant development of technology. While many believe that technology has already reached its limits and points of saturation, I strongly believe that there is still a long way to go. Singapore is a country that believes in technological modernization which can be seen by how Singapore which is perceived as the leader of the global ICT revolution, is rated to have the world’s fastest internet speed in every household. In Singapore, the average household speed is up to 1GBps making it to be among the some of the countries having the most advanced infrastructure. Its government has a clear digital strategy and is an exemplar of online services and e-participation tools, which filters down to its industries and population.
An extraordinary level of co-operation between a country’s mobile operators, regulators, handset makers, payment card providers and point of sale supplier is needed to be successful in breaking through a new market. This so-called alliance is instrumental in enabling the co-operation and coordination required to deploy a new technology that would ultimately impact many facets of an individual everyday life.
A global standard is something countries should begin to adopt rather than proprietary technologies. This can be seen by how a global standard would allow consumers such as foreign visitors use their handsets to pay for goods and services with their NFC enable handsets instead of another device. The emerging global standard stipulates that sensitive data relating to the NFC service being stored in a secured physical domain locally which is no other than the handset’s UICC (commonly known as a SIM or USIM card). It also mandates the use of the “Single Wire Protocol” to connect the UICC to the handset’s NFC chip.
By finally implementing these technology, the companies in the industry would be able to see opportunities to generate revenue by acting as a trusted service manager, enabling service providers to store sensitive data securely on its UICC especially since both consumes and the service providers place a high value on security. This direction would allow the Malaysian economy to generate more revenue and support more jobs. Companies involved would also be able to earn money from service providers whenever a service is downloaded through the NFC USIM.
Kuala Lumpur should advocate the acceleration in the deployment of NFC terminals within merchants and supporting the development of a variety of NFC applications, including secure payments, ticketing, physical access control, user authentication and coupons. It can also consider the deployment of NFC tags that can provide tourist information and customized advertising and also the development of specialized mobile wallets applications that enable a user to discover, access and manage NFC services. Government regulation actually sets the role of stakeholders in the ecosystem. It also influences the business model and market activation.
NFC Service Roaming will enable a mobile user to use the same mobile NFC headset with NFC services in the home country as well as other parts of Asia, in such a way that the mobile user enjoys greater convenience and benefits while travelling abroad. Currently, the most popular NFC services in developed countries such as South Korea today are related to transport. A universal wallet would allow and help a user to use and manage different NFC applications, store credit cards, transportation cards, memberships cards and coupons.
The service also supports mobile internet banking account checks, money transfers, and deposits at the ATM. Portability, affordability and convenience will certainly lead to the creation of new mobile NFC business models within Kuala Lumpur, Malaysia and ultimately lead to a rise in entrepreneurship followed by a decrease in unemployment rate.
Looking at another perspective, the potential to grow the use of NFC after the basic infrastructure is set-up is limitless. NFC could be applied to business models pertaining to verifying the authenticity of liquor to protect consumers, tracking and providing production history of food products like chicken, prevent the illegal distribution of medicine and production of counterfeit medical products, providing tourist information and verifying authenticity of goods.

With the extra security in every USIM such as how a new algorithm is integrated (derived from recent researches in cryptology). It allows the user to be protected from unauthorized access to their phone line which could result in an increase in crimes such as being charged with fraudulent calls on an individual bill monthly. Calls and data exchanges are encrypted using keys computed by the USIM and these keys are stronger than those used by SIMs currently being distributed in Kuala Lumpur, Malaysia.

Encryption has become an essential part of our online lives and many are probably using it everyday without knowing it. At the most basic level, encryption protects the text and data a user sends and receive online. The idea is that no one can read an individual username, passwords, credit card details or anything else that is important to the consumer itself. More technically, encryption uses a complex algorithm called a cipher in order to turn plain text into a series of seemingly random characters, or cipher text that is unreadable by those without a special key. The data is then transferred as encrypted text and when it arrives at its destination a key is used to turn it back into readable text.
Therefore, due to the advanced technology applied in USIM architecture and operating system, secure and complex applications related functions can be performed fast and securely. Examples of such applications include mobile banking and video conferencing. It is without a doubt that NFC is the future and undoubtedly the key bridge technology that can make life more convenient.
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