Enabling Host Card Emulation for Mobile Payments via the Cloud


New Technology Will Enable Financial Institutions to Provision Mobile Payments

Author: Pradeep Moudgal
Published on: April 30, 2014

Boston, MA – April 30, 2014 – Major card networks have recently announced they will certify new technology tools such as Near Field Communication Host Card Emulation (NFC HCE) to provision mobile payments. This technology represents a transformation in mobile payments in that it enables financial institutions to provision mobile payment apps by leveraging existing EMV contactless infrastructure without having to access the secure element in mobile phones, which is controlled by the major telecommunications network operators or carriers. NFC HCE will spur innovation in mobile payment and loyalty applications and the growth of mobile payments in the United States and globally.

Mercator Advisory Group’s new Research Note, Enabling Host Card Emulation for Mobile Payments via the Cloud, defines this emerging technology, discusses the role of the card networks in specifying standards for NFC HCE, and highlights other technologies such as Quick Response (QR) codes and Bluetooth Low Energy (BLE) for mobile payments. The Note also reviews the security infrastructure such as point-to-point encryption, tokenization, and biometrics standards and discusses the growth of contactless payment transactions in leading global markets where the contactless payments have already been implemented such as Australia, Canada, and the United Kingdom. The document is a companion to the recently released Research Note titled Mobile Banking and Financial Services Transformation.

“The recent data breaches at a few major retailers in the U.S. are likely to finally jumpstart implementation of EMV chip payment cards in the United States and deployment of dual-interface point-of-sale terminals that accept EMV and contactless payments. These developments will encourage mobile banking innovation at financial institutions implementing NFC HCE technologies that leverage this infrastructure not only to provision mobile payments but also other value-added services such as tracking and redemption of loyalty points,” comments Pradeep Moudgal, Director, Emerging Technologies Advisory Service at Mercator Advisory Group and author of the note.

Companies mentioned in this Research Note include: American Express, Apple, Capital One, Diners Club International, Discover, EMVCo, FIS, Google, JCB, MasterCard, Merchant Customer Exchange, Paydiant, PayPal, Samsung, SimplyTapp, Sprint, Syniverse, Tim Hortons, UnionPay, VeriFone, Visa, Visa Europe, Vocalink, and Westpac Bank.

This Research Note contains 20 pages and 4 exhibits.

Members of Mercator Advisory Group’s Emerging Technologies Advisory Service have access to these reports as well as the upcoming research for the year ahead, presentations, analyst access, and other membership benefits.

Highlights of this Research Note include:

  • A review of new technology tools to provision mobile payments (NFC HCE, BLE, QR codes) 
  • The role of the major card networks in the certification of this new technology and operating guidelines to provision mobile payments 
  • Review of security standards such as point-to-point encryption, tokenization, and biometrics. 
  • Review of new loyalty features that will be launched through these new technologies 
  • Select global markets growth in contactless payments with a focus on Australia, Hong Kong, China, Canada, and the United Kingdom and other countries in the European Union



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