Google Wallet Regroups, Positioning for HCE Push (March 18, 2014)
Google Wallet is making another course-correction to keep up with fast-moving mobile payments technology. Google recently alerted Google Wallet users that after April 14, only Android phones with the newest operating system, KitKat, will support contactless payments using the wallet. Google Wallet users with older handsets won’t be able to tap to pay after mid-April, although all other Google Wallet features remain intact. Observers say, ultimately, the move may accelerate Google Wallet’s shot at broad consumer adoption in a market that’s embracing Host Card Emulation (HCE).
HCE, which KitKat introduced, enables mobile contactless payments without a secure element built into the handset. (The secure element requirement was an obstacle holding back NFC adoption, according to experts.) Eliminating the cost and complexity of a secure element in a handset could open up more possibilities for retailers, banks and issuers to develop their own mobile payment models, observers say. Visa and MasterCard announced plans to support HCE, and a broad movement to embrace the new mobile payment specifications is under way.
Google wants to jump on the HCE movement too. “HCE could be a big deal … and now that Visa and MasterCard have certified HCE, there’s no reason for Google to require secure elements in handsets; thus the push to get Google Wallet users over to KitKat,” James Wester, research director, global payments, for IDC Financial Insights, tells Paybefore. “If nothing else, HCE shows that we are only just now figuring out how to make mobile payments work,” he suggests. Despite the latest twists in strategy, technology discussions surrounding which approaches will dominate are “far from settled,” Wester adds.