Welcome!

News Feed Item

Consult Hyperion and the GSMA Publish Report Contrasting HCE and SIM Secure Element Approaches to NFC Payments

Digital payments experts Consult Hyperion, in conjunction with the GSMA, today published a guide to help banks and mobile operators understand the Host Card Emulation (HCE) and SIM Secure Element approaches for NFC payments. The guide, “HCE and SIM Secure Element: It’s not Black and White”, follows the recent introduction of HCE into Android 4.4 (KitKat) and concludes that the SIM Secure Element and HCE approaches to NFC payments each offer important benefits for financial institutions. Further, they should not be viewed as mutually exclusive and a combination of the approaches may be appropriate for differing applications and markets.

“This paper provides a balanced analysis for financial institutions of HCE as an alternative proposition for NFC payments, alongside the existing SIM approach,” said Alex Sinclair, Chief Technology Officer, GSMA. “The recent inclusion of HCE into Android opens up the possibility of performing NFC payments without using a SIM Secure Element and HCE could also potentially remove complexity associated with SIM-based NFC payments. At the same time, SIM-based NFC offers a proven secure solution that is being commercially deployed today. The challenge for the mobile operator community is to simplify the provisioning process, further accelerating deployments of SIM-based NFC on a global basis.”

“MasterCard has been technology agnostic, enabling mobile payments in a way that allows current card accounts to be used seamlessly and securely from consumers’ favorite electronic devices,” said James Anderson, senior vice president of emerging payments, MasterCard. “We have deployed SIM and Secure Element-based solutions through partnerships with mobile network operators, OS providers and handset manufacturers, while recently adding support for cloud-based payments. This paper will help both the mobile and payments industries understand the strengths of each approach and allow them to choose the options that align with their business strategies.”

Report co-author Steve Pannifer, Head of Delivery at Consult Hyperion said: “The inclusion of HCE into Android has generated a lot of excitement that can only be good for NFC payments. This, combined with the efforts to streamline SIM Secure Element based NFC evident in many markets, will enable NFC payment products to be rolled out with renewed vigour. We hope that this paper will encourage banks and mobile operators to collaborate further in bringing NFC payments to the market. We believe the mobile operators have an important role to play, particularly in providing mobile security and authentication services that are paramount in any payments service.”

The guide shows that whilst HCE does indeed simplify some aspects of the NFC ecosystem by allowing mobile NFC payments to be performed without using a SIM Secure Element, this is only part of the landscape. HCE requires a new approach to security in terms of ecosystem integration, risk management and certification processes. In contrast, SIM Secure Element processes are well defined and mobile operators are actively working with the ecosystem to simplify them further.

The report examines the heritage of SIM-based NFC, the lessons learnt from the first deployments and the actions that have been taken to allow service providers to deploy secure, stable and proven mobile payment services at scale. The guide finds that whilst there is significant interest around HCE, the SIM Secure Element approach for mobile payments still has many complimentary advantages and it will be down to the banks to carefully review their needs in each of their operating markets.

“Both the People’s Bank of China (PBOC) and China UnionPay have released mobile payment specifications, which require a Secure Element to support NFC mobile payments, in order to provide a secure and reliable payment service. China UnionPay has worked very closely with Chinese operators on large-scale commercial NFC services based on the SIM as Secure Element. In conjunction, China UnionPay is working actively on a feasibility study of new technologies including HCE,” said Jiang Haijian, Deputy General Manager, Mobile Payment Dept., China UnionPay.

Consult Hyperion suggests that there are a number of key points for banks to consider as they plan mobile NFC payments:

  • Understand your local environment: The local conditions will play a big role in determining the best approach
  • Understand your target transactions: It is possible that HCE will be less suited to certain transaction types (e.g. offline, high value) than SIM Secure Element.
  • SIM Secure Element and HCE are not mutually exclusive: The most effective solutions over the medium term may be hybrid models where, for example, the SIM is used to address the security and authentication gaps in HCE.
  • Build flexibility into your strategy: There is likely to be considerable overlap between SIM Secure Element and HCE in terms of the systems and capabilities that are required
  • Collaborate with the industry: Until there is a level of standardisation around HCE, there remains the risk that banks could adopt solutions that are insufficiently flexible or lock the banks in.

David Baker, Head of the Card Innovation Payments Unit at the UK Card Association notes: “While Host Card Emulation has been hailed as a potential game changer for card-based NFC proximity payments, this report gives valuable advice and guidance on the issues the industry must address -- and highlights the real need for collaboration between ecosystem partners to ensure greater adoption of mobile payment services.”

The full report can be seen here

Note to Editors:

HCE is a recent feature of Android that allows an Android application to emulate a contactless card via the NFC interface of the handset; previously, this was reserved to applications stored in a secure chip or Secure Element, typically the SIM card, with similar security features as chip-and-PIN plastic cards. HCE opens the way to payment applications without a secure element, but such applications need to reach a satisfactory level of security. In order to achieve this, card schemes are developing a “tokenisation” approach, whereby the payment card identifier is replaced by a single use or limited use “token”. This reduces the impact of data breaches significantly: if a “token” is compromised it will have limited and possibly no value.

The guide was commissioned by the GSMA, 5 New Street Square, London, EC4A 3BF, United Kingdom. Any opinions, findings, and conclusions or recommendations expressed in the material are those of the author(s) and do not necessarily reflect those of the GSMA or its members.

About Consult Hyperion

Consult Hyperion is an independent information technology consultancy that has spent over two decades advising leading organisations around the world. Consult Hyperion helps these organisations to reap real benefits from technological change in the field of secure electronic transactions ranging from retail payments to mobile wallets to contactless transit ticketing. Consult Hyperion is uniquely qualified to advise on turning great business ideas into working systems that can help customers, and to evaluate new business concepts, develop new products and services from specification to customer roll-out, and to test and certify complex systems.

The four main sectors the company operates in are; financial services, with card schemes, banks, retailers and others; telecommunications and media, advising world leading companies; technology, to support some of the largest IT companies, and in the public sector and transit where projects include transit operators, government and law enforcement.

For more information visit Consult Hyperion, follow on Twitter @chyppings and keep up to date with the latest debate at Tomorrow’s Transactions Blog.

About the GSMA

The GSMA represents the interests of mobile operators worldwide. Spanning more than 220 countries, the GSMA unites nearly 800 of the world’s mobile operators with more than 250 companies in the broader mobile ecosystem, including handset makers, software companies, equipment providers and Internet companies, as well as organisations in industry sectors such as financial services, healthcare, media, transport and utilities. The GSMA also produces industry-leading events such as the Mobile World Congress and Mobile Asia Expo.

For more information, please visit the GSMA corporate website at www.gsma.com. Follow the GSMA on Twitter: @GSMA.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Given the popularity of the containers, further investment in the telco/cable industry is needed to transition existing VM-based solutions to containerized cloud native deployments. The networking architecture of the solution isolates the network traffic into different network planes (e.g., management, control, and media). This naturally makes support for multiple interfaces in container orchestration engines an indispensable requirement.
Everything run by electricity will eventually be connected to the Internet. Get ahead of the Internet of Things revolution and join Akvelon expert and IoT industry leader, Sergey Grebnov, in his session at @ThingsExpo, for an educational dive into the world of managing your home, workplace and all the devices they contain with the power of machine-based AI and intelligent Bot services for a completely streamlined experience.
Because IoT devices are deployed in mission-critical environments more than ever before, it’s increasingly imperative they be truly smart. IoT sensors simply stockpiling data isn’t useful. IoT must be artificially and naturally intelligent in order to provide more value In his session at @ThingsExpo, John Crupi, Vice President and Engineering System Architect at Greenwave Systems, will discuss how IoT artificial intelligence (AI) can be carried out via edge analytics and machine learning techn...
SYS-CON Events announced today that Datera, that offers a radically new data management architecture, has been named "Exhibitor" of SYS-CON's 21st International Cloud Expo ®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Datera is transforming the traditional datacenter model through modern cloud simplicity. The technology industry is at another major inflection point. The rise of mobile, the Internet of Things, data storage and Big...
FinTechs use the cloud to operate at the speed and scale of digital financial activity, but are often hindered by the complexity of managing security and compliance in the cloud. In his session at 20th Cloud Expo, Sesh Murthy, co-founder and CTO of Cloud Raxak, showed how proactive and automated cloud security enables FinTechs to leverage the cloud to achieve their business goals. Through business-driven cloud security, FinTechs can speed time-to-market, diminish risk and costs, maintain continu...
Consumers increasingly expect their electronic "things" to be connected to smart phones, tablets and the Internet. When that thing happens to be a medical device, the risks and benefits of connectivity must be carefully weighed. Once the decision is made that connecting the device is beneficial, medical device manufacturers must design their products to maintain patient safety and prevent compromised personal health information in the face of cybersecurity threats. In his session at @ThingsExpo...
Existing Big Data solutions are mainly focused on the discovery and analysis of data. The solutions are scalable and highly available but tedious when swapping in and swapping out occurs in disarray and thrashing takes place. The resolution for thrashing through machine learning algorithms and support nomenclature is through simple techniques. Organizations that have been collecting large customer data are increasingly seeing the need to use the data for swapping in and out and thrashing occurs ...
As many know, the first generation of Cloud Management Platform (CMP) solutions were designed for managing virtual infrastructure (IaaS) and traditional applications. But that’s no longer enough to satisfy evolving and complex business requirements. In his session at 21st Cloud Expo, Scott Davis, Embotics CTO, will explore how next-generation CMPs ensure organizations can manage cloud-native and microservice-based application architectures, while also facilitating agile DevOps methodology. He wi...
In his session at @ThingsExpo, Arvind Radhakrishnen discussed how IoT offers new business models in banking and financial services organizations with the capability to revolutionize products, payments, channels, business processes and asset management built on strong architectural foundation. The following topics were covered: How IoT stands to impact various business parameters including customer experience, cost and risk management within BFS organizations.
SYS-CON Events announced today that CA Technologies has been named "Platinum Sponsor" of SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business - from apparel to energy - is being rewritten by software. From planning to development to management to security, CA creates software that fuels transformation for companies in the applic...
From 2013, NTT Communications has been providing cPaaS service, SkyWay. Its customer’s expectations for leveraging WebRTC technology are not only typical real-time communication use cases such as Web conference, remote education, but also IoT use cases such as remote camera monitoring, smart-glass, and robotic. Because of this, NTT Communications has numerous IoT business use-cases that its customers are developing on top of PaaS. WebRTC will lead IoT businesses to be more innovative and address...
An increasing number of companies are creating products that combine data with analytical capabilities. Running interactive queries on Big Data requires complex architectures to store and query data effectively, typically involving data streams, an choosing efficient file format/database and multiple independent systems that are tied together through custom-engineered pipelines. In his session at @BigDataExpo at @ThingsExpo, Tomer Levi, a senior software engineer at Intel’s Advanced Analytics ...
Blockchain is a shared, secure record of exchange that establishes trust, accountability and transparency across business networks. Supported by the Linux Foundation's open source, open-standards based Hyperledger Project, Blockchain has the potential to improve regulatory compliance, reduce cost as well as advance trade. Are you curious about how Blockchain is built for business? In her session at 21st Cloud Expo, René Bostic, Technical VP of the IBM Cloud Unit in North America, will discuss th...
yperConvergence came to market with the objective of being simple, flexible and to help drive down operating expenses. It reduced the footprint by bundling the compute/storage/network into one box. This brought a new set of challenges as the HyperConverged vendors are very focused on their own proprietary building blocks. If you want to scale in a certain way, let’s say you identified a need for more storage and want to add a device that is not sold by the HyperConverged vendor, forget about it....
SYS-CON Events announced today that App2Cloud will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct. 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. App2Cloud is an online Platform, specializing in migrating legacy applications to any Cloud Providers (AWS, Azure, Google Cloud).