Samsung Buys Into Digital Wallet Chips
By Eric Lin, Tue Aug 31 22:15:00 GMT 2004

Samsung has ordered a chunk of Near Field Communication chips from Philips. Like DoCoMo's FeliCa, these chips are primarily expected to be used in mobile banking applications, but can be used for tickets, electronic locks and more.

Samsung has joined the mobile wallet push, announcing today that it would buy Philips' Near Field Communication (NFC) chips, for use in some of its handsets. Earlier in the year Nokia announced it would begin to use these same chips in upcoming devices. These NFC chips have been codeveloped by Sony and Philips, both of whom were responsible for the technology behind FeliCa as well.

Like FeliCa, the NFC chips have a small amount of memory in which to store a variety of data (typically account information) and can then trade this information with other reader/writer devices over 13.56 MHz when they are less than 10 cm (about four inches) apart. The main difference is that these NFC chips are capable of exchanging more types of data over more protocols than FeliCa chips, but they are still fully compatible with the FeliCa system.

The win is clear for Philips and for the NFC standards, considering Nokia and Samsung combined make up about half of the world's handset sales. Because the chips are compatible with the FeliCa standard, the combination of these two contracts sounds like a big win for DoCoMo's FeliCa initiative as well since a potentially huge number of phones could soon be FeliCa compatible. The problem lies in NFC chips' compatibility with so many standards. If banks and services outside of Japan chose a standard other than ISO 14443A (which FeliCa uses) for their NFC technologies, it may not be possible to create a worlwide system compatible with Japan's infrastructure.

JCB has already announced it would put its weight behind FeliCa, while Visa earlier announced it would work with Nokia and Philips on NFC systems. If the two use the same standard, NFC could eventually replace magnetic stripes at ATMs, cash registers and just about everywhere else -- worldwide. NFC chips support peer-to-peer communication, and while FeliCa doesn't claim to explicitly, it appears to as well. This could mean that with the appropriate software, people could directly transfer money to each, eventually leading to a cash-free society not too different from the credit cubes from the 1980's TV series Max Headroom.

Despite the fact that JCB and many businesses across Japan already support NFC as a viable financial technology, and Visa has put their weight behind it, American analysts aren't so convinced. Perhaps they aren't aware this is already being used in Japan, but analysts from both the Yankee Group and IDC say this technology hasn't been tested yet and will take a while to catch on. Instead they both follow today's press release suggesting that NFC chips can be used as an even shorter range (and slower) substitute for Bluetooth until financial applications appear. It's unlikely NFC would succeed in such a capacity, but it is also unlikely giants like Nokia or Samsung would integrate these chips into handsets before the applications or hardware to make it successful are in place.