New technology to open up nfc market, but may be thorn in telcos' side
Host-card emulation beyond payments
Android’s forthcoming KitKat update could be used as more than just a means to skirt Isis and wrestle control of mobile wallets from the telcos. It could in fact be used in any NFC service. By leveraging host-card emulation, NFC handsets remove the physical secure element from the transaction, leaving services such as ticketing, identity and access control to be developed and implemented in a shorter amount of time.
Moreover, the inclusion of host-card emulation means that full NFC capability – including operation of the reader functionality of NFC handsets – would be made available to app developers, Cox says. This would give developers the ability to create applications that can turn handsets into contactless card readers, a function that has potential in the mobile point of sale sector and a host of other markets.
This handset as a reader aspect of NFC has long held promise for an array of applications and services, but it has seldom been utilized.
Also at the heart of host-card emulation potential influence is Android’s market presence. The operating system powers the vast majority of the deployed devices on the market today, and Google seems poised to leverage this with host-card emulation.
During the third quarter 2013, Android dominated global smart phone shipments with an 81% share. “This is a positive step for the industry as support for host-card emulation on Android 4.4 brings service delivery opportunities to a huge segment of the smart phone market,” says Cox.
Host-card emulation will also prove to be particularly fitting for issuers who feel that the use of a physical secure element on the device adds insufficient value to justify the hardware’s additional cost.
Opening doors for NFC developers and service providers
In theory, host-card emulation will give service providers more available business models, partners and developers with which to work. Companies like Bell ID are prepping to meet new host-card emulation demands head on.
As a Trusted Service Manager, Bell ID aids service providers in securely managing and distributing contactless services for their customers via the networks of mobile operators. Cox believes that host-card emulation can blow the doors open for loyalty, couponing, access control and transit ticketing.
Bell ID’s Secure Element in the Cloud solution offers two options – a purely cloud offering and a hybrid cloud/physical secure element option. As Cox explains, the hybrid option offers many of same benefits of an exclusively-cloud solution – increased flexibility, greater storage and processing power and no need for SIM certification. The only difference is that it includes the accepted security of a physical secure element.
For the immediate future, Cox sees this hybrid method being the preferred choice, as it offers a different level of flexibility. “Some service providers will opt for a pure cloud solution, while others may believe that for higher value services it is wise to utilize a physical secure element in either the classic NFC model or cloud/secure element hybrid,” he explains. “The beauty of host-card emulation is in the additional options it brings to the market.”