Cloud-based payment on Host Card Emulation (HCE) is a real game changer – but what exactly is it?
HCE was originally introduced years ago by RIM but got more known in 2014 when Google announced support for HCE in the Android devices and both schemes, VISA and MasterCard, published specifications for cloud based payments leveraging HCE in mid 2014.
Nowadays, millions of Android devices as of version 4.4 (KitKat), Windows 10 and Blackberry 10 OS can potentially be enabled for mobile payment through a simple app. The various announcements of HCE projects by financial institutions, retailers and other players clearly show that HCE is about to take off in the coming years.
Companies can enter quickly into the mobile payment market through HCE
As mobile payment has been a hot topic for several years, the majority of financial institutions studied the various technologies for mobile payments in particular NFC-SIM, embedded secure element and thus did a lot of research into HCE as well. Although the technology itself is quite well understood, consulting about the different options of implementation and integration into the existing processing platforms and issuing products is still required.
Telecommunications companies, financial service providers, banks and also retailers can enter quickly into the mobile payment market through HCE. The major advantages are hardware independence, it is easy to use: A HCE app can be downloaded from the app store, worldwide; updates can be made quickly.
HCE not only applies to payment but loyalty, couponing and more
Furthermore, it is EMV compatible: No changes are required to be made by the merchant and it works on existing EMV compatible contactless terminals. And there are additional services: HCE not only applies to payment cards but loyalty, couponing and other value added services
Financial service providers are the first to leverage the potential of HCE
Currently, banks and financial service providers are the first to leverage the potential of HCE and cloud-based payments. This will encompass all type of card products: credit, debit and prepaid as well. But as successful mobile payment projects show, all these services will be enhanced mid-to long term with more mobile services. These may indeed encompass coupons, ticketing but could also be installment payments, social media integration, person-2-person payments and more. The combination of payment and smartphones have the potential to create new attractive services we may not have even thought about yet.