Apple may launch NFC payments in iPhone 6, but the banks and telcos can stop smiling …

West Malling, Kent, UK. August 22, 2014 – It’s that time again. Apple is expected to make a product announcement soon and the Mac-osphere is already going into meltdown about what might be coming. Not for the first time the smartphone “smart” money is on, well, money – or embedded security and near field communications (NFC) to be precise. 

Apple watchers have predicted this before, of course, but this time there seems to be more logic to it. September 9 is slated for an Apple announcement and many expect that CEO, Tim Cook will unveil the iPhone 6. Normally, at M2M Now we wouldn’t concern ourselves with the usual hooha, writes editor, Jeremy Cowan. But lately it’s been hard to ignore the jungle drums that have been beating on about mobile payments via NFC.

Martin Cox (pictured), global head of sales at BellID, specialists in host card emulation (HCE) and token management, told M2M Now there is speculation “that the device will feature NFC and an embedded secure element, but will not support HCE. However, (card issuers) hoping that the new iPhone will offer them an opportunity to broaden their NFC product range may be disappointed,” he said.

 

 

“It appears that Apple is not only planning to bypass the mobile network operators (MNOs), but also the banks. Reports suggest that Apple will offer a payment solution with card images held in an Apple wallet,” added Cox. “The Apple wallet will use the embedded secure element (eSE) along with the user’s payment instrument that is already linked to iTunes. If this is true, then Apple has a unique solution that does not require them to partner with either issuers or MNOs. That would mean no bank wallet, no relationship with issuers and no tie-up with the telcos. Surprise, surprise, Apple is apparently going to launch a solution that is focused purely on Apple.”

Karen Webster, CEO of Market Platform Dynamics, writing on PYMNTS.com last week said, “The timing of Apple’s expected announcement regarding NFC, of course, comes at the same time that merchants are taking delivery of (and ordering) new terminals so that they can become EMV-compliant (EMV, or Europay, MasterCard and Visa due in the US in October 2015. Ed). The hope is that Apple’s inclusion of NFC in its iPhones will convince merchants that have dissed NFC before to reconsider now since new EMV terminals will ship with NFC capabilities.”

We’ll have to wait to see what the folks at Cupertino have in store for us, but this may be another triumph of hope over experience for NFC’s backers. Why? For one reason above all others, the chicken and egg.

Apple may be prepared to take on the banks, the telcos (they’ve done that before), and the card issuers. But according to figures from analysts IDATE, there will be 278 million people worldwide with NFC-enabled Android phones by the end of 2014. Webster points out that of nine million merchants in the US only 270,000 (3.3%) are NFC-enabled.

So why, we wonder, would Apple choose the path of converting 96.7% of merchants in the US alone who have yet to adopt NFC-enabled payment terminals? If the infrastructure was there already we’d be more persuaded.

… while INSIDE Secure licenses NFC patents to LG

Meanwhile, in Aix-en-Provence, France INSIDE Secure, a provider of embedded security solutions for mobile and connected devices, has announced that France Brevets and NFC Technology, LLC have signed a worldwide, royalty-bearing NFC patent licence with LG Electronics, Inc. (LG). Financial details of the license agreement have not been disclosed.

As reported on Business Wire, the agreement is in line with INSIDE Secure’s strategy of focusing on high added-value embedded security solutions for mobile and connected devices while having the value of its patents recognised by the market. The NFC patent license with LG is a first success for France Brevets and NFC Technology, LLC under the NFC Patent Licensing Program that includes INSIDE Secure NFC patents and is managed by France Brevets.

… and Croatian bank tests HCE for mobile
NFC payments on AmEx global network

Three companies, Privredna Banka Zagreb (PBZ), Intesa Sanpaolo Card Ltd., and American Express, have started a pilot to test Host Card Emulation (HCE) for mobile NFC payments at Point-of-Sale (POS) terminals in Croatia. PBZ is reportedly the first AmEx card-issuing partner to test HCE on the American Express global network. (See also: HCE will support SE market growth, with faster mass NFC roll-out and a new authentication role for MNOs)

The PBZ mobile NFC payment services will be enabled initially on smartphones. HCE will allow PBZ to offer mobile NFC payment services to all its cardholders in Croatia, regardless of the mobile network operator, and on multiple payment networks.

With HCE, PBZ can store card account details in a secure, virtual cloud. When a cardholder initiates a payment using an NFC-enabled mobile phone, the card account and payment details are transmitted from the cloud to the NFC-enabled mobile phone and POS terminal, enabling the cardholder to complete the transaction quickly and securely.

Once a cardholder has registered for the mobile NFC payment service with PBZ, he or she downloads the application to the mobile phone handset. Then the cardholder enrolls a payment card using two separate verification codes provided by PBZ. When in a store, the cardholder simply waves the mobile phone in front of an NFC-enabled POS terminal, and the payment is completed.