SIMalliance: HCE No ‘Silver Bullet’ for Mobile Wallets (April 29, 2014)
Several major payments players recently have thrown their weight behind host card emulation (HCE), the technology many believe could be the key to finally bringing NFC-based mobile payments into the mainstream. But a new report says that while HCE does offer benefits to the NFC market as a whole, it isn’t a “silver bullet,” and has issues that must be addressed before those benefits can be fully realized.
The hurdles facing HCE include its immaturity as a technology, lack of widespread standardization and higher vulnerability to malicious attack relative to secure element-based systems, according to the discussion paper from SIMalliance, a trade group that works to promote the secure element’s (SE) role in payments. “[HCE] will make NFC more accessible and versatile to developers and help to speed more services to market which, as a result, will drive consumer familiarity and encourage adoption,” said Frédéric Vasnier, chairman, SIMalliance. “However, service providers evaluating HCE for payment and other high-value NFC services should proceed with caution; HCE presents a new raft of challenges and has the potential to diminish both the transaction security and the end user’s NFC service experience.”
SIMalliance’s concerns echo those from a position statement released in March by the NFC Forum, which also has a stake in SE-based mobile payments, and counts several telecoms among its membership. HCE’s ability to eliminate the SE is largely responsible for the technology’s rise, including adoption by Google, Visa and MasterCard. By emulating an NFC card in the cloud, the technology eliminates the need for a telecom operator to be involved in an NFC transaction, in turn opening up NFC development to third-party developers—such as Amazon and PayPal—by removing telecom-imposed fees and restrictions.
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