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Sony`s Answer to Apple Pay

Sony

While Sony Corp. is scaling back its global smartphone ambitions, the company still wants to contend with Apple Inc. and Samsung Electronics Co. on mobile payments in Asia. Its method for getting there is public transportation.

Sony is trying to make its FeliCa contact-less payment technology as ubiquitous in the rest of Asia as it is on Japan’s railway network. The system uses chips that can be embedded in smartphones and wallet-sized plastic cards, and Sony wants to expand their use in Southeast Asia, starting with an Indonesia train system by March.

Transit networks can be a springboard for attracting merchants into the FeliCa system, as a wide commuter base encourages retailers in train stations or bus depots to participate, said Kazuyuki Sakamoto, a Sony senior general manager in charge of FeliCa operations. The potential market is huge: Southeast Asia needs to spend $60 billion annually on roads, rails and other infrastructure, according to the Asian Development Bank.

“Our approach is different from Apple’s,” Sakamoto said in an interview. “Without real-life situations where the payments can be used, it doesn’t matter how many handsets you have out there.”

Smartphone Shift

Hong Kong’s Octopus system for payments in trains, buses and convenience stores already uses Sony chips, as do the Pasmo and Suica railway cards in Japan.

“Apple Pay and the like are now getting started overseas, but we’ve been offering this service for more than 10 years,” Sakamoto said. “Start with railway passes, then progress to merchants.”

The company plans to make FeliCa easier to adopt. The platform, which would only work in a smartphone with a custom chip, may be embedded as software on common semiconductors as early as next year, Sakamoto said.

Sony, which once envisioned being a top three smartphone maker, has since cut jobs and models to focus on components. If FeliCa takes off, it can sell not only chips but also cards and card readers.

The challenge is in uniting the payments chain: manufacturers, financial companies and merchants. Mobile payments adoption has been anemic so far. Apple Pay, which lets users pay with a tap of their iPhones at checkout, accounted for only 1 percent of U.S. retail transactions a year after launch, according to researcher Aite Group.

Sony, which once envisioned being a top three smartphone maker, has since cut jobs and models to focus on components. If FeliCa takes off, it can sell not only chips but also cards and card readers.

The challenge is in uniting the payments chain: manufacturers, financial companies and merchants. Mobile payments adoption has been anemic so far. Apple Pay, which lets users pay with a tap of their iPhones at checkout, accounted for only 1 percent of U.S. retail transactions a year after launch, according to researcher Aite Group.

Source: Bloomberg