10th September 2014
NFC had a stuttering and uncertain start, with trials as far back as 2007 promising a future where we would all be tapping our phones to buy a coffee, board a train, pay for a cab, buy lunch and receive compelling offers and rewards, all with a simple tap of our smartphones.
The reality has shown us glimpses of this future but we have never quite reached NFC ‘nirvana’ as painted by our forefathers, and yet the technology has continued to thrive, quite simply because it’s the most intuitive, most natural way for humans to interact, through the simple action of ‘touch’. When NFC works, it’s beautifully simple, and that’s why 9 of the top 10 smartphone manufacturers now include NFC as default. Correction, make that 10 out of 10, because yesterday we learned that Apple has finally joined the NFC party with ‘Apple Pay’.
The card schemes Visa, MasterCard and American Express have all historically endorsed and supported NFC for mobile payments through support for Secure Element (SE) based solutions (be they embedded, SIM based or 3rd party SD card based), and more recently endorsement of Host Card Emulation (HCE) for payments. These same card schemes are now also endorsing Apple Pay, an NFC variant based on the embedded secure element architecture already seen previously in some Blackberry, Windows and Android devices.
HCE, announced by Google in late 2013 as a new feature in the Android KitKat operating system, reinvigorated NFC payments for Android devices, offering a much simpler (and cheaper) way to implement NFC payments over the more classical SE based solutions. With no MNO and TSMs in the middle, payment issuers can deploy more cost effective HCE based mobile payment services. Apple Pay has now reinvigorated NFC payments for iOS devices, which means Service Providers can now build business cases across an entire population of their client base, not just a subset.
Apple Pay isn’t HCE, it’s a solution based on an embedded secure element, but that shouldn’t and doesn’t matter. As long as a Service provider can offer a common user experience to all their customers, across all smartphone platforms, the underlying technology becomes irrelevant. I can browse to the Amazon website using Safari on my Apple MacBook running Mac OS X, or via Chrome on my Dell laptop running Windows 8, yet the experience of purchasing that book when I get to the checkout remains completely consistent. The same applies to NFC – whether I pay with my iPhone using pan tokenisation on an embedded secure element, or on my Samsung Galaxy S5 using HCE, I still ‘tap’ and pay using my preferred bankcard account.
For the first time, we can now say that NFC payments has truly arrived across all smartphones, and the ‘9 out of 10’ has become ‘10 out of 10’. And in future I fully expect we will see more features where NFC is combined with other complementary technologies such as Bluetooth low energy beacons and geo-location services, leading to more use cases and more applications across transit, access control, retail loyalty and marketing – solutions that can truly enrich everyone’s life, not just the chosen few.
It has been a long time coming, but finally there is a new way forward for mobile proximity commerce, and that new way will be available on every mainstream smartphone platform. End of story.
Andy Ramsden – Director of Payments, Proxama