Visa and MasterCard Officially Embrace Mobile Payments
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Mobile payments could be ready to take off! This week Visa and MasterCard announced they would support host card emulation (HCE). By supporting HCE, they side stepped mobile payment barriers like the “Secure Element” and effectively simplified the mobile ecosystem.



What is Secure Element?


Traditionally, NFC transactions were carried out using the Secure Element (SE) platform – a chip usually found inside the mobile phone or on the SIM card capable of hosting secure data. Secure element has been a massive barrier to mobile payments because of all the different players involved – each wanting a piece of the transaction pie. Phone manufactures want a part of the transaction margin because they manufacture the chip. The chip communicates with the SIM card, giving carriers the power as to who accesses the secure information. Hence carriers also feel entitled to a piece of the mobile payments pie. But the pie has ultimately belonged to the payment companies, who want to retain as much of it as possible. This struggle of technology, power, and communication was dimming the light on the future of mobile payments.

What’s Changed?


In November 2013, Google introduced host card emulation in Android 4.4. In short, HCE routes credit card data from the “cloud” directly through the phone NFC capabilities. This bypasses the need for secure element – which means bypassing a lot of barriers put up by phone manufacturers and carriers.


With the ecosystem now open, MasterCard and Visa this week officially announced their backing of HCE. By teaming up with the major banks to launch mobile payment projects, we expect mobile payment/wallet apps will be rapidly coming to market. That combined with the expected rollout of NFC payment terminals across the U.S. by late 2015, mobile payments are poised to take off. These trends could also influence Apple to introduce NFC in the next generation iPhones.

What Does This Mean for My Mobile Strategy?


What this means for companies who wish to use mobile payments is that millions of customers now have mobile payment ready phones right in their pockets. Users can now pay from their bank accounts and credit cards directly from their mobile applications. Whether they’re using a coffee shop app, a retailer’s app, or simply a banking application, the option to pay with loyalty cards or a credit card now exists.

How Can Clearbridge Help?


Clearbridge has already established itself as an expert in closed loop mobile payments, and will be helping clients accept credit card payments through mobile applications. To see how you can benefit early from the mobile payment revolution, contact us now.



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