In recent weeks there has been a burst of news in both the tech press and the general interest media featuring Host Card Emulation (HCE), and its potential for making certain types of mobile payments much easier.
If you haven’t yet heard of HCE, it is a technique which allows mobile payment apps based on Near Field Communications (NFC) to operate without using the part of a mobile device’s hardware called “the secure element.” (NFC is the technology used for “tap and pay” apps in which a mobile device is tapped or brought within a few centimeters or inches of a point-of-sale terminal to conduct a payment transaction.)
HCE is considered a significant step forward for NFC payments because the secure element – where sensitive data like credit card data is usually stored on mobile devices – is controlled by mobile phone carriers. By safely bypassing the secure element, mobile payment apps don’t have to work directly with these telecom firms, thus lowering the barrier to entry for new apps, and speeding the overall pace of development.
The adoption of HCE by the 4.4 (KitKat) version of mobile operating system Android means that currently there are more than a quarter-billion HCE-enabled devices out there, and the use of HCE by Google Wallet and a growing number of banks and other mobile wallet providers has given the technology a big push.
But while HCE may be solving a major problem for builders of NFC-based mobile payment apps, it still leaves open the question of the ultimate value of NFC, which, among other shortcomings, isn’t supported by the latest iPhone. As we explained last fall, NFC may be more useful than its most scathing critics say (it has been jokingly dismissed as “not for commerce”). But for developers like Cellum, who are not tied to any one way of making mobile payments, NFC continues to fall into the category of “wait and see.” So for the time being, the same seems to be the case with HCE.