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Summary:

Visa and Mastercard are bypassing the smart card in NFC phones used to verify transactions, moving those credentials into the cloud. The result will be a lot more apps that can take advantage of contactless payments.

visaNFC1

Both Visa and Mastercard on Wednesday announced upgrades to their point-of-sale mobile payments platforms that take advantage of new capabilities in Android’s latest OS update called KitKat. Riding off changes made to Android 4.4 designed to further Google’s digital wallet ambitions, Visa and Mastercard are able to get around a problem that has hobbled contactless payments in the smartphone.

The issue is the secure element in an NFC smart card that verifies the owners identity. More often than not that element controlled by the mobile operator. That control of the smart card has allowed Verizon Wireless, AT&T and T-Mobile to keep out NFC payment options like Google Wallet that would compete with Isis.

Google Wallet

But with KitKat, Google introduced a technology called host-card emulation, which takes that security element off of hardware and reproduces it as software, either in an app, or, as is the case of Visa and Mastercard, in the cloud.

Both Visa and Mastercard are offering up the technology to their banking and developer partners. According to Visa head of Digital Solutions for Developed Markets Sam Shrauger, the new cloud-based implementation of its payWave service will free up the NFC payments from a few specialty digital wallets, allowing any developer to embed point-of-sale payment options into their apps.

For instance, a card issuer such as Citi could turn its own banking app into wallet, letting customers initiate tap-to-pay transaction from the home screen of their account apps. Or a coffee shop chain could embed their loyalty cards directly into a mobile app, Shrauger said.

“For the first time there is an ecosystem that is wide open to anyone to start enabling contactless payments,” Shrauger said.

  1. It’s to bad that cell companies put all their software limits on phones causing these issues. If the cell companies could not place their own software onto the phones they provide we could already be way into the digital wallet using NFC instead of creating a whole new way to use digital wallets and turning it into a cloud based venture

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  2. This shows how clue-imparied the credit card companies are. iOS users use their devices way more than Android, and spend way more money than Android users. And yet they focus on Andriod. Because they are beholden to NFC technologies that are going the way of the Dodo compared to Bluetooth which all phones support.

    NFC is a security threat, and will fail in the end to do what’s being promised here. Target is not just the name of a company. It’s a description of a phone using NFC.

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    1. Yes, most phones support Bluetooth. But how many payment terminals have you run across that can “read” Bluetooth signals? Both sides of the payment transaction need to speak the same language in order to process a payment.

      You might check out www. looppay.com . They have an IOS solution that works with 90% of payment terminals that are out there in the wild today. Does require an external dongle to work however…

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