IT consultancy Consult Hyperion has published a guide to host card emulation (HCE) and SIM secure element, aimed at providing a balanced analysis of both approaches for banks and mobile operators looking at NFC payments.
The guide, titled “HCE and SIM Secure Element: It’s not Black and White”, is backed by the GSMA.
The introduction of HCE into Android last year was hailed as a breakthrough because it allows any app on any NFC-enabled Android 4.4 device to emulate a contactless smart card.
However, Consult Hyperion’s guide concludes thatthe SIM Secure Element and HCE approaches to NFC payments each offer important benefits for financial institutions, but 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," commented Alex Sinclair, CTO of the 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."
The guide shows that whilst HCE simplifies some aspects of the NFC ecosystem by allowing mobile NFC payments to be performed without using a SIM Secure Element, it 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.
Theguide concludes that while there is significant interest around HCE, the SIMSecure Elementapproach 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.
James Anderson, SVP of Emerging Payments at MasterCard added: “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.”