KT Korea pushes NFC SIMs to drive contactless transactions

South Korean operator group KT Korea has purchased 500,000 NFC-LTE SIMs in a bid to stimulate adoption of contactless payment services among its user base. The operator said that the SIM will enable its customers to use their smartphones to pay for transit fares or to retail products at 200,000 contactless terminals.

South Korea is one of the few countries in the world, along with Japan, where NFC has already been deployed commercially on a mass scale. However, usage of NFC services remains low.

According to Guillermo Escofet, principal analyst at Informa Telecoms & Media, 20 million NFC-enabled phones are expected to be in circulation in South Korea by the end of the year. Although this represents around 40 per cent penetration in the country, only one in ten NFC-phone users are using the technology.

“Many can’t see that it adds much value to what can already be done with plastic NFC cards, which are widely deployed in Korea; and around 50 per cent of Korean consumers still don’t know what NFC is,” he said.

He added that a big barrier in South Korea – and one that it shares with the vast majority of other countries in the world – is a scarcity of NFC-enabled payment machines in shops.

“Only around four per cent of South Korean retailers have deployed NFC point-of-sale (POS) terminals – even though these are widely deployed in public transport and taxis.”

KT Korea purchased the cards from SIM manufacturer Morpho as part of a multimillion framework agreement signed earlier this year.