Taiwanese to pay for subway, buses by mobile phone

TAIPEI -- Along with phone calls, short messages, games, and a bit of Internet surfing, people in Taiwan will soon be able to pay subway and bus fares using their mobile phone. If all goes as planned, they may also be able to buy newspapers, a morning coffee, and other items as well.

A Taiwanese government-business alliance has been working on a contactless payment system designed for small purchases. On Thursday, the group announced its first major success: mobile phones made by BenQ  that can be used in the capital city of Taipei to pay for public transportation.

The Taipei Smart Card Corp. is offering 40 people a chance to try out the mobile phones for a test run beginning Sept. 1.

The mobile phones each carry two chips from Royal Philips Electronics which use NFC (near field communication) technology to perform contactless transactions and securely store e-cash.

In the test phase of the new system, the mobile phones will store value for transport fares. Consumers will pay to top up value in their mobiles and then touch them to Smart Card system readers already installed throughout Taipei at subway stations and on buses.

Early next year, members of the government-business alliance hope to offer the same technology on mobile phone SIM (Subscriber Identity Module) cards, so people won't have to buy a new handset just for the payment function. The alliance is called the Proximity Mobile Transaction Service Alliance (PMTSA)

Taipei Smart Card valued the mobile phones already designed for the system at around NT$5000 (US$157). Taipei's subway and bus system already uses a contactless payment system designed by Philips, which relies on plastic stored value cards that already speed people through subway turnstiles.

Alliance members say the SIM card-based technology would be more than just a simple payment system, it would be a complete e-wallet, combining stored cash for small payments with a credit card, debit card, and helpful information.

Contactless payment systems have been popular in Asia. Hong Kong, one of the leaders in use of e-wallet systems, boasts Octopus, a card that can be used on public transportation as well as in a variety of shops and restaurants. In Japan, mobile phones with Sony's contactless transaction technology have been big sellers, and the Sony has said it expects a further boost in sales early next year after the East Japan Railway Co. adopts the system for ticketing.