NFC Host Card Emulation

MasterCard announced last month that  it will publish a specification that leverages Host Card Emulation (HCE) for secure near field communication (NFC) payment transactions. The approach will enable consumers to easily use their MasterCard-branded cards on their NFC-enabled phones to make contactless payments. Today, there are two million contactless-enabled merchant locations in 63 countries around the world.

Android Developers states that Android-powered devices that offer NFC functionality already support NFC card emulation. In most cases, the card is emulated by a separate chip in the device, called a secure element. Many SIM cards provided by wireless carriers also contain a secure element. Android 4.4 introduces an additional method of card emulation that does not involve a secure element, called host-based card emulation. This allows any Android application to emulate a card and talk directly to the NFC reader. This document describes how host-based card emulation (HCE) works on Android.

Host Card Emulation (HCE) is the presentation of a virtual and exact representation of a smart card using only software. NFC transactions were mainly carried out using the Secure Element approach so far. With the release of Android 4.4, Google introduced a new platform support for secure NFC-based transactions through Host Card Emulation (HCE), for payments, loyalty programs, card access, transit passes, and other custom services With HCE, any application on an Android 4.4 device can emulate an NFC smart card, letting users tap to initiate transactions with an app of their choice.

Apps can also use a new Reader Mode so as to act as readers for HCE cards and other NFC-based transactions. NFC has faced adoption issues due to lack of infrastructure (terminals) and secure element approach not allowing players like Google to operate freely. HCE allows for the following: it reduces the gap between merchants and card issuance, brings the topic of closed-loop and contactless in focus, and, more tactically, allows for an easy deployment scenario that does not require them to change the software inside the terminal.