MasterCard Worldwide has signed a letter of intent with Russian cell-phone carrier Mobile TeleSystems to bring PayPass contactless-payment functionality to Russian mobile data only sim phones, the card brand announced Oct. 28.
Mobile TeleSystems, which will offer SIM cards embedded with PayPass functionality, demonstrated the technology at the Rosnanotech 2011 conference.
It is the first such proposed agreement between MasterCard and a Russian telecommunication company, MasterCard spokesperson Elena Prorokova tells PaymentsSource.
“It wasn’t a deal in the legal meaning of the term,” she adds.
MasterCard has several projects already in place with Russian banks to distribute PayPass-enabled MasterCard payment cards, including Alfa, Moscow Industrial, Petrocommerts, Raiffeisenbank and Russian Standard.
Prorokova would not say how many MasterCard PayPass cards were in circulation in Russia or how many merchant terminals in the country can read them. However, as the end of June 2011, there were nearly 100 million PayPass-enabled cards and devices in circulation globally that consumers may use at 341,000 locations worldwide, she says.
According to Russia’s Securities Market magazine, only about a dozen merchants in Russia accept PayPass, but there are “tens of thousands” of MasterCard PayPass bankcards in circulation.
MasterCard has PayPass-enabled phone trials and rollouts under way in numerous regions around the world, Prorokova says.
This week alone, for example, there were announcements involving PayPass-enabled mobile phones from Australia (see story) and Singapore (see story).
Mobile TeleSystems is the largest mobile operator in Russia and other former Soviet republics, and reports more than 100 million subscribers throughout Russia, Armenia, Belarus, Ukraine, Uzbekistan and Turkmenistan. The population of the areas where it has a GSM wireless spectrum license is 230 million, giving the company a market penetration exceeding 43%.
“The MasterCard partnership will set the groundwork for the most extensive development of NFC payments in Russia,” Andrew Dubovskov, Mobile TeleSystems president, said in a press release.
Earlier this month, Mobile TeleSystems also began deploying NFC-enabled handsets that allow customers to pay for gas at Lukoil stations. Lukoil is one of Russia’s biggest oil companies.
Mobile Telesystems did not respond to requests for comment, but Russian online magazine Nag.ru reported that it uses a payment system from Yekaterinberg-based TelePay.
In that initiative, mobile subscribers get new SIM cards that use technology from Israel-based On Track Innovations Ltd., a contactless smart card services provider. It is the first commercial NFC project in Russia, Mobile TeleSystems announced earlier this month.
The system is undergoing a trial in the Russian city Perm by Lukoil and Mobile TeleSystems employees, and it will be available to all Perm subscribers in November.
Replacing an existing SIM card for a new card and adding an NFC antenna will cost subscribers 100 rubles (US $3.37 or 2.47 euros). New Mobile TeleSystems customers can get the NFC technology pre-installed for 150 rubles, the company said. Users will see a new option on their phones, the “Lukoil Wallet,” which they can preload with funds.
“We are the first in Russia to bring commercial implementation of NFC payments,” Vadim Savchenko, Mobile TeleSystems vice president of sales and service, said in an Oct. 7 press release. “NFC is gaining popularity in many countries around the world and turns on its head our preconceptions about cell phones and payments.”