i. What is Host Card Emulation?
Host-card emulation is an enabler technology, which creates an exact representation of a smart card platform on a mobile device. It allows NFC contactless applications to be remotely hosted in the cloud. Traditionally the user data was only stored inside a mobile device, popularly known as Secure Element Platforms.
In other words HCE platform allows mobile devices to emulate any contactless smart card and store the secure data remotely on the cloud. It operates using only software rather provisioned secure element (SE) in the device (hardware)
HCE allows users to just tap their mobile devices on the terminals to initiate transactions with an app of their choice.
ii. Why HCE is being considered as game changer?
HCE is being seen as an excellent low cost and easy to install alternative to the standard Secure Element Platform. There are various benefits attached to HCE, which is why many experts consider it as a real game changer that will drive more NFC adoption within next two years.
Earlier, even though there was enormous interest within Telecom and Banking sector to launch NFC mobile applications but the key challenges were the lack of sufficient Infrastructure and high cost attached to storing the user data securely inside the device.
HCE is seen as the solution that can end to these problems as it can potentially avoid the dependency on the TSM (Trusted Service Managers) and high costs of replacing NFC SIMs, installing expensive POS (Point of sales) terminals.
iii. What are the various services that HCE can be useful?
HCE can be used for various services including Payments, tokens/loyalty programs, access control, transit ticketing, and other value added services alike.
iv. Impact of HCE on TSM and NFC SIM Industry
On one hand, many experts believe that HCE is going to give a much-needed thrust to the NFC industry, which had slowed down due to its complexity. On the other hand in the long run HCE will adversely affect the TSM and some hardware industries for example – NFC SIM and chip based sectors.
Others say SE (Secure Element) is not getting obsolete anytime soon and it will not majorly affect the TSM and hardware business as its an established platform which offers a robust and temper proof method to store user data inside the mobile devise. HCE is still at a very nascent stage and has a lot to prove before being becoming an accepted standard.