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.
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.