Research reveals banks’ attitudes to HCE


Global bank-led industry association, Mobey Forum, has published a white paper detailing the results of a survey that outlines the attitudes of its international membership toward the adoption of host card emulation (HCE).

The survey reveals members’ appetites for third-party support with HCE solution development and ranks their key criteria for the selection of a technology partner.

With close to 70% of respondents keen to outsource some or all of any future HCE solution to third-party providers, the paper, titled ‘Host Card Emulation in Payments: Options for Financial Institutions’, identifies security, usability and cost as key determinants in the decision-making process.

A diagram showing Transaction Flow in a Full Cloud Based HCE Solution
Transaction Flow in a Full Cloud Based HCE Solution

“HCE has the potential to fundamentally change the layout of the mobile payments landscape, but it comes with its own complexities,” comments Zaf Kazmi, Chair of the Mobey Forum HCE Workgroup and Head of Mobile Payments & Commerce at CaixaBank.

“Some financial institutions are attracted by HCE, others will continue to place their faith in traditional secure elements (SE) and some will seek to use a mixture of the two. Understanding the market dynamics and key control points will be essential to success. This is where Mobey Forum can draw on the knowledge of its membership to cut through the confusion and marketing hype.”

In addition to the proprietary research, the paper also presents a history of HCE and explains its position as an alternative to ‘traditional’ near field communication (NFC) payments. Two main HCE deployment options – full cloud and token-based – are discussed in conjunction with the roles and responsibilities of the key stakeholders.

A diagram showing Transaction Flow in the Card Emulation by Phone Application Solution
Transaction Flow in a Full Cloud Based HCE Solution

Security concerns are outlined in addition to information on the current thinking on how to mitigate them. The document concludes by analysing the business models and the criteria identified by the banks when selecting a HCE solution partner, before mapping HCE onto the control point model established by Mobey Forum in its previous mobile wallet white paper series.

“HCE is a shot in the arm for the slow moving NFC payments industry so, in this paper, we have outlined the pros and cons together with business model analysis, enabling banks and other institutions to make more informed decisions,” concludes Kristian Thure Sørensen, member of the Mobey Forum HCE Working Group and Senior Manager, Corporate Strategy at NETS.

“HCE does resolve some of the deployment ecosystem’s complexity, but it also generates some of its own. Our HCE Workgroup is working hard to understand the nuances of this technology and its impacts so that the banking community can invest with confidence.”

Host Card Emulation in Payments: Options for Financial Institutions is available for download free here.

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