• Michael Weeding

Why Organisations are Bringing NFC mWallets to Market with Inadequate Infrastructure to Support Cons


One of the biggest challenges facing the adoption of NFC, as a day to day technology, is how to drive the scale of rollout across all service industries. While the potential of NFC is significant, the ability to realise the potential is dependent on having adequate infrastructure. One of the most talked about applications for NFC is mobile payments, and many mWallets are being rolled out by financial services and technology organisations across the world. So why the rush when the infrastructure and regulation in most markets is not yet ready to support large consumer adoption of these services?

Mobile payment applications are executed in a secure environment known as the Secure Element (SE). The SE works on the basis of the industry standard EMV chip that is found on a current bank or credit card, it contains the cryptographic keys needed to authenticate and authorise any NFC transaction and is critical because it ensures that any NFC transaction is protected from unauthorised access such as electronic pick pocketing. The secure element can either be within the SIM card, on a secure MicroSD card or an accessory such as a sleeve. It also can be integrated as a chipset on the phone’s circuitry that is connected to the NFC radio chip, also known as the Embedded Secure Element (eSE).

When you swipe your phone with the POS, the payment applet communicates through NFC with the reader. When a current bank or credit card is sent to a customer the payment applet is pre installed. Although with a mobile phone the payment application needs to be downloaded. When a users subscribes to a payment service provider the payment applet is downloaded Over the Air (OTA). Once the payment applet is on your phone the provisioning service is handled by a Trusted Service Manager (TSM). The TSM establishes a secure channel between the TSM and the SE.

Deciding on which secure element to use will depend on the business model, although in each of these solutions the mesh of solutions, vendors, and services providers, each with their own agendas and solutions creates a very complex environment. The challenge has been that the NFC technology can only support one active secure element until late last year when Broadcom introduced their new NF C controller chips that allowed two secure elements to be supported on the phone at any one time. As a result an NFC phone containing a Broadcom chip can therefore support multiple secure elements, but it will need to be a combination of SIM and Embedded, SIM and MicroSD, MicroSD and Embedded or two Embedded Secure Elements.

When Apple made the announcement last year that they had published a patent that sets out a way for a virtual SIM card to be built into an embedded secure element the general discussion was that Apple had made this move to ensure control of the unit in direct competition to the Mobile Network Operators (MNO). While this may be part of the story the real motivation behind this decision is more likely that it just would not make sense for Apple to develop a business model that relied on the SIM, where the technology limitations could impact the consumer adoption of any NFC services that they roll out in the future, particularly when Apple was never going to be first to market with NFC services. In this case Apple has built their business model for NFC using technology that looks more adaptable to support multiple applications, if a consumer already has an NFC application when Apple roles out their NFC solution then the barrier to adoption will be consumer choice, not the limitations of the technology.

For mWallets that rely on the SIM or MicroSD as the secure element the race is on to grab consumer adoption. With current technology, excluding the Embedded Secure Element, only being able to support one active NFC application being the first application onto a consumer’s phone may be the most important move in securing loyalty and of course market share.


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