I was rTagawaeminded recently of the NFC Forum’s statement regarding Host Card Emulation (HCE) we issued in March, 2014. What jogged my memory was a discussion I had with the Executive Director of the NFC Forum Paula Hunter about her presentations at the Host Card Emulation (HCE) Summit in New York City earlier this year. She participated in a Power Panel titled: “Evaluating Americas’ Mobile Contactless Payments Landscape.” That same day she was back on stage to deliver a second presentation. This presentation was titled: “HCE and Beyond . . . It’s Not Just a Transaction.”

It is clear that interest in HCE continues to increase at a steady pace in markets such as payments, transportation, retail and the Internet-of-Things (IoT). This is good for the NFC market because HCE provides an additional means to perform NFC transactions. With HCE, transactions take place using credentials stored in the cloud or on the host processor of the NFC-enabled mobile device rather than a tamper-resistant Secure Element (SE), such as an embedded security chip, SIM or microSD card.

In my discussion with Paula it became clear to both of us that the advantages of HCE are well-known and discussed regularly but that the challenges of deploying HCE are still somewhat hazy and not as well-understood. Over the next few paragraphs I’m going to outline the HCE advantages and challenges with the hope to spark some industry discussion and debate around the latter topic.

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HCE Advantages – Open, Cloud, Security Optimized

First, it is important to note that the NFC Forum is technology-agnostic when it comes to using HCE or a silicon-based approach to security for NFC devices. The NFC Forum has specifications that enable all these options.

The advantages of HCE are that it is an open, cloud solution that provides security level optimization. It offers users the ability to govern their own service exclusive of a secure element (SE) approach. HCE is also highly scalable and flexible and operates on standard NFC Devices (Android, Windows, Blackberry).

Security optimization is another HCE advantage. What this means is that the security levels can be optimized to meet service requirements.

HCE Challenges – Maturity, Lack of Standards

HCE faces two important main challenges: age and standards.

HCE is still young. It is supported only on recent versions of NFC devices running Android, Windows and Blackberry. This challenge is one faced by all new technology. With 500 million NFC devices in the market right now and over a billion in use by 2018, this challenge is steadily being surmounted. The more NFC-enabled devices in consumer hands over the next few years will provide the impetus to manufacturers and service providers to leverage HCE capabilities into new products and services.

Lack of industry standards is the second challenge. The guidelines, specifications, certification for non-EMV use cases are not fully established. This is the real issue for HCE. Industry-wide standards open to all is the primary catalyst to global adoption and proliferation of new applications. Developing standards is also the really hard part to accomplish with any young technology. It is both a very creative process and a very technical exercise. HCE is supported by NFC Forum specifications, including the NFC Controller Interface (NCI) specification which in combination with other standards such as ISO 14443 and JIS X 6319-4 enable HCE implementations. More work is underway at the NFC Forum around HCE and SE. Some of the discussion around the future of HCE will be discussed during the NFC Forum’s upcoming Members Meeting in Dallas this month.

“It Takes a Village” to Standardize a Technology

Since the NFC Forum’s HCE statement a little over two years ago, the industry has made great progress toward adopting, developing and rolling out the new technology. The advantages of HCE are self-evident and limited only by the imagination of the technologist. The challenges, on the other hand, are less well-defined and very complex. It will “take a village” — to paraphrase a popular saying — to establish the standards that will allow all of us to utilize HCE to its full extent. I encourage your feedback and comments on these thoughts I’ve shared with you about HCE.