Banks’ Approach Varies on Host Card Emulation, Survey Indicates

Bank-led industry association Mobey Forum has polled bank and technology vendor members on their attitudes towards the adoption of host card emulation (HCE).

“HCE has the potential to fundamentally change the layout of the mobile payments landscape, but it comes with its own complexities,” said Zaf Kazmi, chair of the Mobey Forum HCE workgroup and head of mobile payments and Commerce at CaixaBank.

“Some financial institutions are attracted by HCE, others will continue to place their faith in traditional secure elements (SE) and some will seek to use a mixture of the two. Understanding the market dynamics and key control points will be essential to success. This is where Mobey Forum can draw on the knowledge of its membership to cut through the confusion and marketing hype.”

With close to 70% of poll respondents keen to outsource some or all of any future HCE solution to third-party providers, Mobey Forum has issued a paper, entitled
‘Host Card Emulation in Payments: Options for Financial Institutions’
, which identifies security, usability and cost as key determinants in the decision-making process.

The paper also presents a history of HCE and explains its position as an alternative to ‘traditional’ near field communication (NFC) payments. Two main HCE deployment options – full cloud and token-based – are discussed in conjunction with the roles and responsibilities of the key stakeholders.

Security concerns are outlined in addition to information on the current thinking on how to mitigate them. The document concludes by analysing the business models and the criteria identified by the banks when selecting a HCE solution partner, before mapping HCE onto the control point model established by Mobey Forum in its previous mobile wallet white paper series.

“HCE is a shot in the arm for the slow moving NFC payments industry so, in this paper, we have outlined the pros and cons together with business model analysis, enabling banks and other institutions to make more informed decisions,” said Kristian Thure Sørensen, member of the Mobey Forum HCE working group and senior manager, corporate strategy at NETS.

“HCE does resolve some of the deployment ecosystem’s complexity, but it also generates some of its own. Our HCE workgroup is working hard to understand the nuances of this technology and its impacts so that the banking community can invest with confidence.”

The paper can be downloaded free of charge from the
Mobey Forum website


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