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In eight months, consumers in Singapore will be able to use their smartphones to pay for meals, groceries and taxi rides.

Payment for train and bus rides could be possible as early as 2013, when the Land Transport Authority (LTA) approves a cellphone payment technology based on a Near Field Communications (NFC) wireless standard. Basically, this allows users to tap their smartphones on sensors to make payment.

Yesterday, the Infocomm Development Authority (IDA) awarded a contract to a consortium led by French smartcard chipmaker Gemalto to build and run the national NFC system.

Tipped to cost $40 million - including undisclosed funding from the IDA - it will be operational from the middle of next year.

The other consortium members are Citibank Singapore, DBS Bank, EZ-Link, M1, SingTel Mobile and StarHub Mobile.

The IDA contract, announced last November and awarded this month, paves the way for Singaporeans to pay with cellphones, regardless of which bank or telco they are with.

Yesterday, Tan Eng Pheng, senior director of industry cluster at the IDA, said the consortium was selected as it was able to get two banks and at least two telcos involved in its business proposal, among other criteria.

Payment service Network for Electronic Transfers (Nets) had also bid for the contract.

NFC technology allows cellphones to be used as stored-value cards like Nets CashCards as well as debit and credit cards issued by banks.

Consumers just need to download a smartphone app from the banks. They will not be charged for transactions, and no signature is required for payments under $100 when they use their mobile phones like a credit card.

This is not the first time Singapore has tried to roll out a mobile payment system.

The IDA promoted the use of cellphones to pay carpark charges in 2003, but the service failed to take off partly because it was cumbersome. Users had to get a personal identification number from their bank, an SMS code or call a certain telephone number for transactions to be approved.

In 2007, trials were run to test the use of cellphones to pay for transit rides and food. But these services did not gain mass appeal because users on one payment platform could not transact with merchants on another.

Experts said what was lacking then was a neutral entity that functioned as a common link for all players.

The other reason past attempts failed was a lack of mobile handsets that supported contactless payment. Today, there are a few models of NFC phones available in Singapore, including the Nokia 700, Nokia 701 and BlackBerry Bold 9900.

Technology also allows existing handsets to be NFC-enabled via bridging devices that will be sold by all three telcos from the middle of next year.

The LTA said it had put up a tender, which closed on Monday, to test the use of NFC phones for transit payments.

Some 20,000 retail points - for instance, Takashimaya, Challenger, and ComfortDelGro and Tibs taxis - already have contactless payment readers which let consumers tap ez-link or Nets FlashPay cards.

They can process NFC cellphone payments too.

The NFC model is on trial in many countries. It is being commercially launched in South Korea by SK Telecom, and involves more than 8,000 convenience stores and 20,000 vending machines.

Reprinted courtesy of Straits Times Indonesia. To subscribe to Straits Times Indonesia and/or the Jakarta Globe call 021 2553 5055.