Nokia and the merchant acquiring arm of China UnionPay have announced the launch of a trial in Shanghai allowing users to download a loyalty application over the air to their contactless NFC phones.

It’s the second trial in China of handsets complying with Near Field Communication technology, following the launch in late June by Nokia and other parties of a contactless transit ticketing and e-cash application loaded onto about 100 phones in the southeastern port city of Xiamen. But the Shanghai trial will be the first NFC pilot anywhere in which users can download the application over the mobile network to a secure chip embedded in the phones, according to Card Technology.

This secure chip is connected to a separate NFC chip in the Nokia model 3220 handsets. The 50 users in the trial will then be able to redeem their loyalty points for purchases. The loyalty program stores points on a server and resembles a prepaid debit program that consumers would use to make purchases. The process of this trial is similar to a bank debit or credit card, the next step is to go for NFC trials with actual bank cards, a spokeswoman of Nokia says.

Over-the-air downloads are considered vital to the business case for NFC phones because banks, transit operators and other service providers could then send new services, tickets, e-cash and related updates to phones already in the pockets of their customers.

Nokia and Germany-based smart card vendor Giesecke & Devrient plan to form a joint venture this year to operate a fee-based service to securely download applications and other data and code to NFC phones. It was unclear whether the Shanghai trial would use G&D’s OTA platform, which it announced developing earlier this year for MasterCard Worldwide’s PayPass contactless payment application.

For the two- to three-month Shanghai trial, which launched Aug. 1, Nokia says users will enter their China UnionPay loyalty card numbers and PINs into their handsets. The phones will then connect via the mobile network to a server, which will verify the information and download the loyalty "card" onto the handsets, says Nokia.

• Guangzhou Also To Launch NFC Trial
• Visa Announces Public Trial of Visa Mobile Platform in Taiwan
• Nokia Launches China’s first NFC Mobile Payment Trial in Xiamen
• Hong Kong To Introduce Japanese Wallet Phones
• INSIDE Chosen for China’s NFC-enabled M-Payment Deployment
• Chongqing Commercial Bank Launchs Contactless Purse
• Watchdata Joins SIMalliance
• Motorola’s M-Wallet Launched in China