NFC Payments – chance for the roadblock to be cleared

Posted on February 20, 2014


I try not to just comment on rolling news about mobile, as there are so many more people who do this, and do it full time.  However sometimes an important event occurs that makes me sit up and think.  Here is one.

Using your mobile phone to pay for things at a point of sale has long been an unfulfilled desire.  I and many people I know would like to be able to use our phones to pay,  start an app, select the card/account you want to use,  and then authorise payment.
The first part, is not that hard, indeed there have been many proof of concepts over the years, (indeed I was involved some 7 or 7 years ago now!) none achieving success.
The reason is that the banks and the mobile operators would both like to be the owner of the wallet and payment mechanism,  as there are lots of revenue and profit to be had.  So each keep to a situation that blocks the other.
On the one hand the mobile operators defend access to the most secure parts of the device making it very hard for an app to have acceptable security on the device side.
On the other hand the banks and credit card suppliers keep data protection rules and standard operating procedures that effectively make it impossible for an operator to use the customer’s existing banks/credit cards.

All very frustrating for those of us wanting to carry less, and be able to pay with ease.

Now however there is a possible, and we’ll come to why it is only possible, break to this impasse,  as there is a standard that lets you store the most secure parts of the payment card in “the cloud” bypassing the requirement to access the phone’s secure element, and there are reports today that this is being supported by Visa and Mastercard.  If this comes about then one side of the impasse is unblocked, and progress can be made.
Ok so the standard is called Host Card Emulation (HCE) and here is a google article, and a list of HCE news from NFC world, and the important thing is,  once the credit card companies lend support then there is a chance that your standard debit or credit card can be made to work,  and that’s when this really gets interesting.

However, one of the reasons why this might yet another of a series of false dawns, is that for this to work, it would appear to rely on having a working, effective connection over the internet to the cloud platform.  notwithstanding the role out of 4G and the supposedly improved indoor coverage (I’m yet to see it, with my Vodafone 4G device) the connectivity in shops can be very poor indeed.  In particular the large out of town stores.  So either the stores put in femto/pico cells for each carrier in each store, the operators provide better coverage, or stores have a frictionless wifi process.
Otherwise the payment would be unreliable, or not available,  and that will kill this dead.  We consumers demand perfection from our payment mechanisms.

I deliberately did not tie the payment mechanism to NFC because the use of Bluetooth Low Energy (BTLE) connections (you might know these through the Apple term iBeacons) could replace the need for NFC.  Good for not having to physically get your phone within 4cm of the point of sale reader, but potentially bad as all devices in a, up to, 30 meter range of a beacon could connect.  This would allow Apple devices to work (they have no plans for NFC support).
Given that BTLE is upto 11okb/s it may be possible to have the link to the payment servers, e over BTLE, as I presume that the request would be a few relatively small request / response pairs, so obviating the need for wifi or mobile data. hmm liking that idea.