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A streamlined approval for contactless mobile-payment devices announced Wednesday by chip card standards body EMVCo could help mobile-payments boosters realize their elusive dream that the coming of chip cards to the U.S. also will lift smart-phone-based payments.
The new approval process is meant to confirm that mobile devices enabled for contactless payments can “operate seamlessly” with so-called EMV Level 1-approved payment-acceptance terminals, according to an EMVCo news release. EMVCo’s Level 1 specification defines the physical characteristics, radio-frequency interface, and transmission protocol between credit and debit cards and the payment terminal.
“This is the first time that EMVCo has provided formal certification for contactless mobile-payment devices,” EMVCo said. EMVCo is owned by the global card networks Visa, MasterCard, American Express, Discover, Japan’s JCB, and China’s Union Pay.
The U.S. is in the midst of a massive replacement of magnetic-stripe point-of-sale terminals by new EMV chip-card readers. Most of the new chip-card terminals also are equipped with near-field communication (NFC), the contactless radio technology that supports Apple Inc.’s Apple Pay and other mobile-payment schemes.
But many U.S. merchants can’t yet process chip card transactions. The reasons for the lag are many and include the delays many merchants have had in just getting their EMV equipment certified by processors to handle contact transactions generated by plastic chip cards, let alone mobile payments. Those delays prompted the major networks over the summer to announce faster certification processes.
Fewer merchants still have turned on the NFC functionality even if they have EMV terminals. NFC-based transactions require still more certifications. Apple recently reported that about 3 million U.S. locations accept Apple Pay—about half the U.S. card-accepting merchant base—but a large number of those are vending machines.
Lack of consumer demand for mobile payments also has given merchants little reason to turn on NFC. A new study by Javelin Strategy & Research found that while mobile-wallet adoption has nearly doubled since 2013, the average user makes only three transactions per month, down from 3.7 three years ago.
Still, the potential for mobile payments is growing as the EMV terminal base grows. And many of the major smart-phone manufacturers, including Apple and Samsung, now include NFC in all or many of their products.
“EMVCo recognizes that the use of mobile devices to make contactless payments is growing in popularity,” Jonathan Main, chairperson of EMVCo’s board of managers, said in a statement. “It is important that the payments industry supports manufacturers’ product-development cycles, while ensuring that the correct testing is undertaken to confirm that a product will be interoperable with the established payment infrastructure. The centralized testing framework from EMVCo will significantly streamline the existing process to optimize product time to market.”
EMVCo said its new certification process includes not just smart phones, but also tablets and wearable devices. The process will cover contactless systems based on a mobile device’s secure element (SE), and on a cloud-based NFC variant known as host card emulation (HCE).
