MasterCard and Visa have announced their support for HCE – host card emulation – technology that has been developed which will mean that credit card companies will be able to offer cloud-based payments. The new technology would, effectively, enable them to avoid the hardware-based mobile payment scheme that is backed by mobile operators.
HCE technology, currently included in the Android 4.4 (KitKat) and the BlackBerry operating systems, enables mobile payments, as well as other NFC (near-field communications) services to be supplied without the need for an SE (secure element) to be embedded into the smartphone’s SIM card. The use of NFC technology within smartphones facilitates secure, easy, contactless payments, which are quicker than using cash and waiting for change. MasterCard’s approach combines custom software that is on the mobile device with highly secure, cloud-based processing. Consequently, the deployment of NFC-based mobile offerings is simplified and faster to consumers.
Analyst at Sterne Agee, Vijay Rakesh, has said: “We believe this is partly an effort by the card issuers to circumvent the MNOs who could potentially charge fees for the secure element. On the other hand, liberalisation of payments with HCE will drive NFC adoption.”
Principal of Ovum, Eden Zoller, concluded: “HCE effectivelyu severs the dependency of NFC payments on an SE embedded in an NFC device or SIM card, in preference for a virtual SE on remote servers in the cloud. This implementation supports a more open model for NFC deployments and makes service provisioning much easier for banks, issuers, developers and other third parties. This has the potential to open up the NFC market to more innovation and competition, but at the expense of mobile operators.”
By Allie Philpin