HCE (Host Card Emulation) and the launch of Apple iWallet will drive the number of contactless transactions via mobile handsets to exceed 9.9 billion by 2018 from over 3 billion this year, said Juniper Research.
The report said HCE transforms an app into a virtual smartcard, so that for NFC (Near Field Communication) transactions, the SE (secure element) no longer has to be physically present in the handset.
Utilizing a remote, HCE-based SE can reduce time-to-market and means that banks can retain control of their customers without needing to partner with mobile network operators. It also observed that the recent decision of Visa and MasterCard to endorse HCE should reassure banks who may have been concerned about the relative security of transactions.
Apple will introduce an iWallet in Q4 2014 which enables secure contactless payment via BLE (Bluetooth Low Energy) and a second air interface. Apple’s entry into proximity payments would drive growth in the wider contactless space by increasing consumer awareness of the mechanism, indirectly benefitting adoption of NFC.
While the industry as a whole would receive a boost from these factors, network operators would lose out, Juniper Research said.
Windsor Holden of Juniper Research said: “With the emergence of HCE, the operator role at the heart of the NFC value chain is no longer sacrosanct. Banks can now go it alone and as a result the scale of the operator opportunity is significantly diminished.”
