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VOL. 22 NO. 3
for their program is really smart because leaving the merchants out of the discussion is problematic. You dont have a payment solution unless you have merchants ready to accept it. Scenario 2: Information is stored in a secure element in a portable SIM chip that plugs into the SIM slot in most phones. The mobile operator submits its secure element SIM to the brands, which test and approve it so it can go into any number of phones; its not limited to any make or model, Vanderhoof explains. So this could support faster deployment of multiple models of phones. Mobile operators want to use NFC in the secure element SIM because they control that real estate and therefore they can control what banks are going to reside on that and probably extract some favorable terms either in terms of fees or service charges to have the app on the phone. Theyre deciding which of their models and customers will get the app, which means the bank takes a back seat to
the operator in that exchange with the consumer. Scenario 3: Card data (and in some cases an NFC radio) is stored in a microSD card. The advantage here is that the microSD chip contains both the NFC chip and the secure element, so it can retrot into older phones that dont have any NFC capability built in, Vanderhoof says. If youre looking at trying to get the most mobile devices to the market the quickest, then the advantage would be to use the microSD card as the delivery system of both NFC and the payment app. You could plug that into any phone that has a microSD slot. Banks want to control the payment app, and the best way that they can do that is through the microSD card, Vanderhoof says. They can shift a microSD card to their customers without involving the handset manufacturer or the mobile operator, it doesnt interfere with their service. Many of the early mobile payment trials conducted by Visa,
MasterCard, Bank of America, Wells Fargo, Chase and U.S. Bank used this model, deploying an NFC chip made by DeviceFidelity. In this approach, banks could send out new microSD chips to customers the way they send out new credit and debit cards today. Weve been watching and waiting for the NFC market to mature so that the same contactless chip enabled payment solution that works well on cards also will work in mobile phones, Vanderhoof says. The mobile phone brings another element to the payment experience that cards will never do, which is the interface to the cloud and internet and realtime communications with the cardholder through their mobile device, which opens up new capabilities around payments that cards could never compete with. Were trying to prepare the market, merchants, consumers and issuers to think in terms of where they want to be three to five years from now with a changing payment infrastructure.
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