Google Wallet Pulls End-Run Around Telecoms (Nov. 4, 2013)
Google’s latest Android mobile operating system includes a new feature that could enable Google Wallet to cut out telecom providers as middlemen for NFC applications. Unveiled late last week, Android 4.4 includes technology called Host Card Emulation (HCE), which emulates an NFC card in the cloud, eliminating the need for a secure element and trusted service manager for NFC applications, including payments. Bypassing those two requirements, in turn, obviates the need for telecom operators to be involved in NFC transactions. Google Wallet has been hampered by a lack of support by telecoms, including Verizon and AT&T, who have cited security concerns and—perhaps more to the point—operate a mobile wallet of their own in Isis.
But HCE is more than just a thumb in the eye to mobile providers, says Rick Oglesby, senior analyst with Aite Group. “Overall, this is an attempt to do two things,” Oglesby tells Paybefore. “First, make Google Wallet’s NFC payment capability available on more phones. Any Android phone with an NFC chip now can use it,” he notes. The second aim for HCE, according to Oglesby, is opening Google Wallet’s NFC capability to third-party developers by eliminating telecom-imposed fees and restrictions on NFC development. “This means other companies, like Amazon and PayPal, could offer NFC payments on Android phones as well.”
Oglesby cautions, however, that merely bypassing telecoms won’t immediately open the NFC floodgates. “What this doesn’t do is create compelling reasons for consumers to pay via NFC or for merchants to accept NFC payments. There is still a lot of experimentation to be done to make that happen, but with the help of third-party developers it may accelerate a bit,” says Oglesby. And HCE will help reduce the business complexity associated with deploying the solution, he notes—and that reduced complexity “will allow others to play and could potentially open up the market.”
