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February 20, 2014

Visa and MasterCard Turn to Host Card Emulation for Mobile Payments

The field of mobile payments is one that's viewed with increasing desirability. People who already take a smartphone along for most every trip like the idea of using it in place of a wallet, and mobile payment processors like the idea of taking a percentage of every payment to handle the behind-the-scenes matters. Visa and MasterCard, meanwhile, have picked a format when it comes to handling mobile payments through near-field communications (NFC) technology, and the weapon of choice for these two credit card titans is host card emulation (HCE).

Visa and MasterCard both expect, at last report, the use of HCE to drive interest and use of mobile services like payments via NFC, a market that was lagging a bit on some reports. But with HCE, NFC services can work around the secure element (SE) put in place by mobile operators and instead allow mobile devices to directly function more like credit cards, hence the name “host card emulation.” Visa's SVP of digital in developed markets, Sam Schrauger, described it as a way to “...open(s) the ecosystem for app developers,” as well as fodder for some “pretty interesting use cases.” Schrauger also noted that, when using HCE, “payment information is implemented in (app) software so no need to get payment information into the secure element.”

Both Visa and MasterCard are, at last report, working on bringing out standards for the new platform, which in turn was adopted by the Android community last year. The combination of both Android and Visa and MasterCard involved with the platform should make it more enthusiastically accepted by developers, and in turn, drive more services to put it to use, making it as much a de facto standard as anything else. Indeed, as the group head of emerging payments at MasterCard, James Anderson, noted, “the use of HCE provides a very attractive way forward to launch an increased number of NFC-based offerings.” Visa has even, at last report, augmented its payWave service for cloud deployment, and will be bringing future improvements to it like in-app payment mechanisms and support for QR codes. It's even working on a new platform entirely that will allow for Visa accounts to go completely cloud-based.

It's good to have a standard platform to develop from, and with all the support HCE has behind it so far, it's looking increasingly like HCE—and by extension NFC—could be the mobile payment mechanism of choice in the not too distant future. Indeed, there are plenty of advantages to having such a platform in place—convenience, for example, can help drive sales by being able to take better advantage of the impulse buying thought process—and putting a platform that's got so much support behind it should yield excellent results in terms of security and ease of use, making it a safe platform that's easy to work with, and thus, the ultimate platform of choice for many users.

We'll see just how well this all works out in the months ahead, but it's looking like a safe bet that Visa and MasterCard may well have a big slice of mobile payments lining up.




Edited by Cassandra Tucker




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