A recent report from Juniper Research (Mobile Payment Strategies: Remote, Contactless & Money Transfer 2014-2018) predicts that the value of global payments via mobile devices will reach around $507 billion this year, a rise of nearly 40 per cent year-on-year.
Early adopters making mobile payments would normally have done so via the SIM card in their mobile device, and subsequently be billed by their mobile service provider. However, the solution now gaining most traction is to move the secure element away from the hardware to the software via Host Card Emulation (HCE).
HCE reduces the gap between the merchants selling goods and the card payment organisations by enabling easier online payments as it does not require the software inside the terminal to be changed. This of course cuts out the telecoms service carrier and brings the card payment organisations to the fore of this burgeoning market, and the substantial revenue that it represents.
The carriers have some heavyweight supporters behind them, such as the GSMA. Its Digital Commerce Programme’s Global Interest Group is focused on SIM-based mobile NFC services. Likewise, GlobalPlatform, a cross industry and non-profit association, is pushing the payment application on the mobile device or card as the key focus area to ensure a secure mobile payment.
However, it would appear that the mobile payment tide continues to turn from SIM-based payment to HCE as the card payment organisations are now taking a lead within the market.
In February, Visa introduced a new standard that uses HCE to enable financial institutions to securely host Visa accounts in the Cloud. At the same time, MasterCard announced its intention to publish HCE specifications for secure NFC payment transactions.
In March, EMVCo (whose member organisations are American Express, Discover, JCB, MasterCard, UnionPay and Visa) also announced its EMV® Payment Tokenisation Specification. It believes that the new specification will help provide the payments community with a consistent, secure and globally interoperable environment to make digital payments when using a mobile handset, tablet, personal computer or other smart device.
HCE is also built into Android’s KitKat, the operating system that powers more than one billion smartphones and tablets. The pervasive nature of Android, its popularity amongst developers, and the card payment providers’ commitment to support HCE has made it the current front runner for mobile payments, but it is not yet clear who will finally win the mobile payment battle over the coming years.