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The startup that popularized a cloud-based approach to mobile payments using near-field communication (NFC) on Monday opened to card issuers and mobile-application providers a developer platform that could make it cheaper and easier to include digital cards in mobile apps.
The platform, from Austin, Texas-based SimplyTapp Inc., offers tools specific to so-called host card emulation (HCE), the technique SimplyTapp developed last year to allow NFC payments to bypass the mobile phone’s secure element. The platform is also forgoing fees for application programming interface (API) calls, the signals for data that apps send in the course of a transaction. SimplyTapp announced it will credit the first $5,000 in API calls, which cost a penny each.
The credit is intended to create an incentive for banks and developers to create and experiment with digital cards and mobile apps. “People have been burned by large fees for pilots,” Doug Yeager, SimplyTapp’s chief executive, tells Digital Transactions News. Particularly nasty, Yeager says, are fees assessed by service providers regardless of whether any users sign up for the mobile wallet. “Those fees add up pretty quickly for not much value in return,” he notes. “That’s what we’re trying to get away from.”
Morever, to simplify compliance, SimplyTapp has included HCE specifications from MasterCard and Visa in its software development kit. “If you follow the steps, you’re running HCE (in accordance with network rules),” says Yeager.
SimplyTapp’s new platform is “an important step in terms of making [HCE] solutions more accessible,” says Rick Oglesby, who follows mobile payments as a senior analyst at Centennial, Colo.-based Double Diamond Group. “It’s a great way to let the ecosystem gain some momentum.”
Perhaps more important, if the platform can attract a significant number of financial institutions and developers, it could position SimplyTapp to play a key role in NFC-based mobile payments. “SimplyTapp can become the central hub of NFC payments, the single point of integration for lots of wallets,” Oglesby says. “SimplyTapp is saying, ‘I’m looking to be the aggregator of these card data needed to complete an NFC transaction.’”
Even so, while HCE simplifies mobile payments, and the new platform makes HCE easer, a formidable obstacle course remains for banks to run. Most merchants still don’t have the contactless point-of-sale readers necessary to interact with mobile devices, and consumers have yet to demonstrate clear demand for wallets, Oglesby points out.
Also, while the platform’s API credit may appeal to developers and lower costs compared to programs based on the secure element, it won’t make HCE anything close to cost-free. “In-house technology upgrades [financial institutions] will have to make will cost money,” Oglesby says. “There’s significant coding they’ll have to do.”
With host card emulation, card credentials are stored on a remote server rather than in the secure element and are delivered via tokens at the time of the transaction. In bypassing the secure element—often an embedded chip controlled by the handset manufacturer or the SIM card, which is controlled by the mobile carrier—issuers can gain access to customers’ phones while avoiding access fees.
The technology was introduced last fall by Google Inc. in its latest Android operating system upgrade, known as KitKat, using software developed by SimplyTapp.
