Have Telcos been out Maneuverered - NFC Payments no longer need the SIM

Feb 20, 2014
Posted by: David

Everyone used to say to do NFC payments you had to engage with the Telco as you needed the secure element on the SIM. This seemed to put the Telco in a very strong position, even when dealing with banks. In the UK one could argue that was some of the premise behind WEVE in that this way the banks could deal with one company for all their mobile payment access no matter what the network.

So the very recent announcement that Visa and MasterCard will support for a cloud-based NFC system that removes the usual reliance on telcos for contactless payments in my mind is very important. Not only is it both schemes, but this means global mobile payments on a single platform/solution becomes a lot more realistic as you don't have to do with Telco's in each country.

Whereas there is usually a 'secure element' on a phone's SIM card that enables NFC, Host Card Emulation (HCE) allows Android apps to use payment accounts that are securely hosted in the cloud. The HCE feature is already supported on Android 4.4 KitKat, which launched in November 2013 and continues to be rolled out on Android devices.

MasterCard andn Visa between them are already quote a range of banks worldwide they are working with including: Capital One, Banco Sabadell, ANZ, NAB, Royal Bank of Canada and US Bank.

So does this new cloud-based technology change the balance of power between network operators and banks by providing the banks with an alternative to renting a space on the SIM to house account information. Only time will tell, but it has it could be argued not in most markets been that strong a relationship and HCE could be the enabler that allows banks once again to be free of the need for Telco support.