Page 108 - Pay Magazine s2014

mobile money
Mobile PayMents tech concePts
Poised to Accelerate Adoption
By Kate Fitzgerald, Emerging Payments Editor
Two major obstacles are standing in the way of broad mobile payments adoption: lack of a broad user base and a compelling business model.
But new developments could spark significant changes. Smartphone penetration has soared, mobile wallets are proliferating and several technical concepts —HCE, BLE and NFC—now promise to reduce costs and open mobile payments to diverse participants.
Here’s a look at some of the acronym-centered tech- nologies that could go a long way toward spurring broad adoption of mobile payments, plus some facts you might find interesting.
NFC
A building block of mobile payments architecture.
Near Field Communication (NFC) is a wireless com- munication technology that makes it possible to ex- change data between NFC-enabled devices a few centimeters apart, enabling payments with a wave
or a touch anywhere near a contactless card reader. An NFC-enabled phone incorporates smart card data and can store a payment application, including con- sumer account information, so the phone operates as a virtual payment card. Though NFC has found
a niche in transit, retail and fast-food payments in some urban centers, the lack of a large base of NFC-ready phones hampered broad NFC deployment at the POS.
HCE
A protocol to store payment card credentials in the cloud, instead of in handsets. Host Card Emulation
NFC-eNAbled smArtphoNes (ANNuAl shipmeNts)
*estimated
275 120
million
2012 2013
source: IHS Inc.
2014 2018
416
million* million
1.2
billion*
(HCE) emerged this year as a cheaper, easier approach to handle payment card credentials by moving them to a secure, virtual cloud, instead of physically embedding them in a mobile phone. NFC-ready phones may use HCE to emulate a contactless card at the POS, eliminat- ing the ongoing cost and hassle of managing card cred- entials between the handset and financial institution.
Because HCE also frees NFC payments from depen- dence on a specific network operator or handset
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