MasterCard to Use Host Card Emulation (HCE) for NFC-Based Mobile Payments

MasterCard has announced it will publish a specification that leverages Host Card Emulation (HCE) for secure near field communication (NFC) payment transactions. The approach will enable consumers to easily use their MasterCard-branded cards on their NFC-enabled phones to make contactless payments. Today, there are two million contactless-enabled merchant locations in 63 countries around the world.

An open architecture, HCE enables payments and other NFC services – including loyalty programs, building access and transit passes – to be delivered without the use of a secure element (SE). The specification, developed over the past year with Capital One and Banco Sabadell, marks a significant industry milestone that, in addition to MasterCard’s longstanding support for embedded and SIM-based SE implementations, will drive greatly expanded availability of mobile contactless payments for consumers.

“Consumers are now shopping and paying in whatever way best fits their needs and lifestyles – and from every device they own. To meet their expectations for convenience, we need to accelerate the availability of services in the market. The use of HCE provides a very attractive way forward to launch an increased number of NFC-based offerings,” said James Anderson, Group Head, Emerging Payments at MasterCard. “We continue to set standards and deliver solutions to our partners and customers that deliver great experiences for safe and secure digital payments.”

As a critical part of the specification development process, MasterCard worked with Capital One on the initial pilot and with Banco Sabadell on a European pilot. The pilots have helped inform MasterCard’s direction, and the learnings will pave the way for additional deployments planned in 2014 with other financial institutions around the world.

“For Capital One, the pilot was about exploring new ways to commercially deploy an NFC-based offering and securely store credentials. We’ve enjoyed a longstanding partnership with MasterCard, and we continue to work together to deliver innovative solutions for our bank customers,” said Jack Forestell, Executive Vice President, Digital, Capital One.

“We were extremely pleased with the ease and speed in which pilot participants were able to add their payment cards to their NFC-enabled phones,” said Albert Figueras, Credit Cards and Consumer Finance Manager of Banco Sabadell. “As one of the most innovative banks in Europe today, it’s important that we continue to meet the needs of our consumers in our rapidly evolving digital society.”

The use of NFC technology within smartphones facilitates secure, easy contactless payments. Contactless payments are faster than using cash or waiting for change. Since 2012, MasterCard has seen a 180 percent increase in the number of merchants – from major retailers and quick service merchants to convenience stores, gas stations, grocery stores, pharmacies, vending machines, parking lots, mass transit and taxis – that are now contactless-enabled.

HCE is supported in the Android OS KitKat 4.4, which began shipping in November 2013 and continues to roll out on popular smart devices. MasterCard’s approach combines custom software on the mobile device with highly secure cloud-based processing. This greatly simplifies and speeds the deployment process of NFC-based mobile offerings to consumers by card-issuing financial institutions. MasterCard plans to publish its secure remote payment specifications during the first half of 2014.

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