Host Card Emulation (HCE) technology support is growing by leaps and bounds. Since it was introduced in the KitKat version of Android Operating System, HCE support in smart phones has been growing in a steep curve. Last month Google released new usage numbers showing that 25% of all smart phones running Android OS are already doing so with KitKat. That’s a healthy 17% month-over-month increase from the number just released in August.
What’s more, as most OEMs and MNOs roll out phones with the new operating system, KitKat OS penetration is even higher among the new smart phones being shipped. Google has been very committed to bringing OEMs to the new platform; leading us to believe that eventually all new Android OS smart phones could have HCE support.
When that happens, a whopping 85% of all smart phones shipped, the global Android market share, would support HCE. Numbers released by the research firm IDC for Q2 2014 show that 84.7% of all smart phones shipped globally were running Android OS. That is up considerably from the from 80% market share they had at the end of 2013.
Click the image to see our updated HCE Infographic
And chances are that a lot of these new smart phones will also have Near Field Communication (NFC) chip technology allowing for proximity payments. ABI research expects a total of 320 million NFC-enabled devices to ship in 2014, the great majority of them Android smart phones. And IHS research estimates 2 in 3 phones to come with NFC technology by 2018, amounting to 1.2 billion phones shipped with NFC.
With the HCE quiet revolution, banks and merchants have at their disposal a global platform for deploying mobile payment services. Today HCE/NFC support is already present in tens of millions of phones and will soon be present in the majority of new smart phones shipped globally.
The other advantage of the more open approach of the Android ecosystem is that banks and merchants don’t need to be inside another entity’s wallet to enable mobile payments. Banks and merchants have collectively spent billions of dollars powering mobile apps to provide the best mobile services to consumers. They see their apps as the preferred low cost, high touch channel of interaction that can deliver rich services through mobile devices. Using Sequent software they can enable their existing banking and merchant apps to become wallets for payments anywhere in the physical environment.
Sequent is now deploying HCE mobile payments for clients such as the third largest bank in Europe, Sberbank and has developed powerful IP to enable HCE, tokenization, risk management and other aspects of cloud-based mobile payments. Sequent is also a very experienced “TSM” provider for mobile payments with secure elements, having deployed commercial mobile commerce systems to Sprint Rogers, two Tier-1 global banks, CIBC and Trüb. That experience allows us to deploy “hybrid” systems supporting both HCE and secure elements.
Our app-enablement “Open Wallet Platform” provides APIs so developers can add payment functionality to existing mobile apps. Our patented app-enablement APIs turn apps into wallets and allow consumers to make one-tap mobile payments at physical merchants using NFC, barcode and other technologies. Banks and merchants can focus on the consumer experience through their apps and leave the complexities of technology, payment and security to Sequent.
The HCE revolution is happening now and banks and merchants should not wait to participate.