Martin Cox – Global Head of Sales, Bell ID
Mobile payments have been a major talking point in Australia and around the world for a number of years. Hype around trials, joint ventures and roll outs have come and gone and the feeling of frustration that all of this effort and expense has not achieved mass-market deployments has grown.
Google changed all of this for the Australian marketplace with one announcement in 2013. The incorporation of host card emulation (HCE) into the Android platform brought significant relief to many of the key banks and service providers that have been trying, yet failing, to make progress in launching mobile payments using USIM secure elements. Australia is widely regarded as a market where HCE can solve a number of issues and achieve traction quickly, so Australian banks and service providers are now sprinting to develop this technology and become first-movers within their markets. But why is HCE perfect for Australia?
- Establishing a TSM infrastructure has been difficult
As with many markets around the world, Australian banks, mobile network operators (MNOs) and service providers have been unable to work together effectively and a trusted service management (TSM) infrastructure has not been implemented.
Whilst the introduction of TSMs to manage the USIM-based ecosystem has been a success in countries such as Canada, the release of Google’s Android KitKat 4.4, which enables NFC-based transactions through HCE, presents an opportunity. Leveraging HCE and cloud-based secure elements, financial institutions and service providers can take control of their implementations and come to market independently, avoiding the need for complex business relationships with other entities in the ecosystem.
- There is already a strong contactless infrastructure
HCE mobile payments use the same contactless point-of-sale (POS) infrastructure as contactless cards. This is an ideal starting point for Australia, where contactless-enabled terminals are widely deployed, with over 100,000 contactless POS terminals across Australia already.
On top of this, Australian banks are innovative and open to new technologies, and consumers are quick to adopt new payments methods, as was the case with contactless cards. Around twelve million contactless cards are already in circulation, so Australian consumers already accustomed to the ‘tap-and-go’ culture will quickly adapt to mobile payments.
- The commitment to Embedded Secure Elements is wavering
Australia was one of the few countries where embedded secure elements (eSE) were launched for mobile payments. As little adoption has come globally, however, commitment from the handset manufacturers is now wavering as eSEs represent an additional expense. For example, although included in the Samsung Galaxy S4, there is no eSE in the vast majority of S5′s. With NFC becoming prevalent in handsets but eSEs receiving less support, this leaves the door open for HCE to become the dominant technology for swift and widespread mobile payments deployment.
There are already a number of projects underway which may see HCE-based mobile payments applications in the hands of consumers this year. In addition to the market drivers which make HCE-based mobile payments perfect for Australia, there are a number of benefits for banks and service providers. Using cloud-based SEs provides increased flexibility, storage capacity and processing power, in addition to reducing the costs and complexity of implementation. For the consumer, mobile payments offer simplicity, convenience and much quicker payments.