A domestic war for standards

Usually when there is an issue about standards in China it is about pitching an international standard against a domestic one (such as TD-SCDMA or WAPI).

This time the dispute is between two Chinese firms who are both trying to impose their own standard of mobile-payment technology. On one side there is China Mobile – the country largest mobile phone operator – who pushes for RFID chips embedded into the SIM card. On the other side there is China UnionPay, a bank-card-network operator backed by the government who pushes for near-field communications (NFC).

Who will win? NFC operates at a higher frequency than RFID which is supposed to make it less vulnerable to hacking. There also seems to be more indigenous technology around NFC (e.g., readers) which reduces royalties to foreign firms. In addition China UnionPay has a quasi monopoly on all online transactions. Last but not least, it has partnered with China Mobile’s competitors (China Telecom and China Unicom). The downside is that NFC comes at a cost. And there is of course the fact that the battle is fought against a behemoth, which happens to be the most valuable brand in China (over RMB 200 billion).

For once the government’s job is not as easy as usual. Very pragmatically it playing the clock and suggesting to conduct more tests.