Visa and SK Telecom Announce Plans to Launch Mobile Payments

Visa International and SK Telecom today announced plans to launch what they expect to be the world's first contactless payment application on a universal SIM (USIM(1)) card which is personalized over-the-air (OTA(2)). Visa and SK Telecom plan to implement this large-scale commercial service in South Korea in April 2007 with an OTA solution based on Visa's recently announced mobile platform. The two organizations also agreed to develop new business models and to seek business opportunities overseas by spreading the OTA-based USIM service. Overseas cooperation activities will include efforts to establish global standards for OTA personalization based on the platform being utilized in the Visa - SK Telecom program.

"This collaboration is a significant step forward, especially in a mobile market as advanced as South Korea where consumers are already aware of mobile banking applications and are keen to see utility and services expanded," said Gordon Cooper, regional head, mobile payments, Visa Asia Pacific. "Bringing together one of the world's most innovative mobile operators with a leading global payment network opens up immense opportunities for the mobile payments business globally. Our collaboration is an example of convergence in action with mobile phone subscribers able to make Visa Wave contactless payments at the more than 50,000 contactless readers at merchants in Korea."

The combination of the OTA and USIM technologies is aimed at speeding up the growth of mobile payments in South Korea because of the convenience it offers consumers - fast, secure and direct access to new payment applications. South Korea is an innovative market with close to 40 million mobile subscribers and more than 83 percent penetration for mobile services(3).

"Through an early pilot and close cooperation since 2002, our work with Visa has already brought a great deal of experience in mobile payments," said Joo Sik Lee, senior vice president, SK Telecom. "This year we will see real advancement in bringing mobile payment solutions to consumers. SK Telecom is the leading operator in Korea with about 20 million mobile phone subscribers and increasingly we expect to see high demand of our new USIM-equipped 3G phones that will benefit from this OTA service. A commercially scalable OTA service, modeled on the recently announced Visa mobile platform, is a critical first component of our overall vision for mobile payments - and this project is an important step in moving towards that vision."

Using SK Telecom 3G phones, the launch is planned to initially involve 30,000 SK Telecom subscribers. They will be able to install the Visa Wave contactless payment application directly onto their handsets via OTA without having to visit their bank. The user simply sends a message to the bank requesting the Visa payment application. The bank then sends the application through mobile internet into the secure USIM chip. As the payment application resides on the subscribers' USIM card, they will not be restricted to making payments only from that device. SK Telecom 3G subscribers who wish to change to a new handset need only move the USIM card to the new device.

"Visa's strategy for mobile payments offers new revenue opportunities for mobile operators and merchants not only in Asia Pacific but around the world," said Gaylon Howe, Jr., executive vice president, global strategy, products and innovation, Visa International. "Using SK Telecom 3G phones, the launch is anticipated to be the largest and most significant OTA service in the world, and comes on the back of last month's mobile platform launch as an example of the benefits of bringing together the best of the mobile and payment industries."

Visa's mobile platform is a set of mobile services and enabling technologies that will allow banks and mobile operators to develop new mobile payment services for individual markets. A key component of that platform is the standardization of security requirements for OTA downloads of financial data to mobile devices. SK Telecom's OTA service, provided by Cassis International, is designed to enable Visa Wave contactless payment applications and cardholder account data to be downloaded to consumers' phones securely and reliably. Visa Wave contactless payment removes the need to swipe or insert a smart card into a payment reader. The customer simply waves the card or phone to make a purchase.

Visa and SK Telecom have collaborated on a series of programs to accelerate the growth of the mobile payments business, having initiated the first mobile payments pilot program using EMV-based payment and infrared technology in 2002.