Best Practices: Can Host Card Emulation Break the Deadlock of Mobile NFC Payments in Asia?

Best Practices: Can Host Card Emulation Break the Deadlock of Mobile NFC Payments in Asia?

This IDC Financial Insights study introduces a new mobile proximity payment technology called "host card emulation (HCE)." It compares the benefits and challenges of HCE with existing Near Field Communications (NFC) architectures based on a trusted service manager (TSM) architecture and features a detailed case study of Asia Pacific's first commercial rollout of HCE technology by the Credit Union of Australia (CUA). Furthermore, it discusses the necessary security measures, such as tokenization through single-use key and limited-use key, to mitigate the lack of a physical secure element (SE).

"We believe that HCE will be an important catalyst for the growth of mobile NFC payments, as it reduces a lot of the ecosystem complexities of NFC payments and offers a much faster time to market at considerably lower operating costs," says Thomas Zink, research manager at IDC Financial Insights. He adds, "The technology my spur new interest from banks and service providers (SPs) to launch and promote NFC payments, but by itself, it will not break the paralysis of NFC payments. The success of ApplePay and its expected internationalization will play a more crucial role in propelling NFC payments past the critical adoption threshold."

Please Note: Extended description available upon request.

IDC Financial Insights Opinion
In This Study
Situation Overview
Physical Secure Element
Cloud Secure Element
Cost and Operating Model
Business Needs
The Best Practices
Credit Union of Australia Case Study
CUA's Situation
Implementation and Challenges
Deployment Models
Business Impact
CUA Perspective
Cuscal Perspective
Lessons Learned
Future Outlook
Essential Guidance
Actions to Consider
Learn More
Related Research
Table: Benefits and Challenges of an HCE Infrastructure
Table: Security Assessment of Physical SE versus HCE
Table: Advantages and Disadvantages of Tokenization
Figure: TSM Ecosystem Facilitated by a TSM Hub
Figure: HCE NFC Ecosystem Resembles a Four-Corner Contactless Card Model
Figure: HCE Payment Cycle with Tokenization

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