You’ve probably heard a lot on HCE – Host Card Emulation. Mobile industry had a great welcome on HCE, since contactless will become a software layer and get rid of hardware dependency. Actually every stakeholder in the NFC ecosystem except the SIM card vendors was thrilled.
Google was third in the line for the NFC, -after Nokia and Blackberry, but they took the “Google way” and they are now the champions of the mobile NFC game.
So, what is HCE? HCE is an software abstract of contactless smart card. It is now specific to Android, but definitely portable to other mobile operating systems as well.
As the definition suggests, it is an emulation of a contactless smart card. What is the capability of a contactless smart card? Mainly payment, identification and transportation. What happens when one of these cards, say your id card, which you use for entering your office building is just an app on your mobile phone? Or your contactless credit/debit card? Sounds intriguing.
Before HCE, contactless smart card was being emulated by a hardware chip and software (mobile app) was needed for the hardware to be activated. Hardware component was either a chip embedded on the phone or the SIM card. Either way, a few more parties other than the owner of the handset itself was involved in the game and it was quite complicated to activate and use the NFC app. Now with the HCE, smart card is still being emulated but this time it is software rather than the hardware.
In the hardware mode, contactless (NFC) reader was working with the secure element.
Now with the HCE, hardware component -SE or the embedded chip is not needed. Android itself emulates the hardware. Apps will use the interface provided by the operating system again but this time there is no hardware below the API.
When it comes to payments, software only solution comes with a price; security issues. The answer to EMVCo is tokenisation. The actual card data that is stored in the software layer in the app is required to be a token only, which will enable the backward compatibility with the contactless readers. But the actual payment transaction will occur in the cloud. Quite similar to Google Wallet. HCE is an evolutionary next step of Google’s approach in the latest wallet implementation, which I covered in a previous post.
HCE will open a new set of possibilities in the NFC ecosystem from contactless to remote payments. It will enable more projects, let’s see how will it contribute?