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Contactless payments are just the beginning – what could be next for phone manufacturers

Contactless payments are just the beginning – what could be next for phone manufacturers

With phone manufacturers embedding secure elements in more and more of their phones, we find out what this means for consumers, service providers and phone manufacturers, from Fidesmo’s Iván Rico.

When did phone manufacturers start using secure elements?

Phone manufacturers have been experimenting with secure elements for many years, but it finally hit the mainstream market in 2014 when Apple Pay and the iPhone 6 were launched. This enabled users to make secure contactless payments by connecting a payment card to the secure element – a small, embedded NFC chip – in the phone. It was followed by Samsung Pay, Huawei Pay, and even Garmin Pay and Fitbit Pay, which all use an embedded secure element in devices.

Why do phone manufacturers use a secure element for transactions?

High security. Using hardware, i.e., the secure element, is much safer than using software for transactions or indeed for storing other forms of highly sensitive information. Why? Because hardware can’t be hacked in the way software can. If a secure element is tampered with, it is destroyed. Secure elements also provide an added layer of encryption as they utilize anonymous digitized credentials for any type of transaction or exchange of data. For instance, when a payment card is connected to a secure element, the card number is replaced with a unique digital token which is unusable if stolen or copied.

What else are secure elements used for?

Well, that’s the big question. Phone manufacturers stopped at contactless payments. But look beyond payments and secure elements are used across many applications – monthly travel cards, e-identities and passports, security passes and door locks, you name it. This means there are tens of millions of phones in people’s pockets that could be used for so much more than contactless payments or consuming media. And that’s where we come in. We make it easier, faster and cheaper for phone manufacturers to offer secure element-based services to their customers from new and established service providers.

Can you give us an example of extended Phone use?

Absolutely. We are currently implementing a pilot service for Madrid public transport, which will see commuters able to connect travel passes to the secure elements on their phones. Today, if you blip your phone on a ticket reader –assuming you have a card connected through a Pay service – it will take payment for a single ticket. Once the Fidesmo system is up and running, the ticket readers will identify if a travel pass is connected to the phone. It will then use the pass or otherwise take payment for a ticket.

What are the benefits of using a Phone as a metro travel card?

Public transport companies are looking to digitalize their operations and the passenger experience is a large part of this. QR scanner systems are costly and require passengers to open apps on the phone, which is slow and inconvenient, especially on a busy metro system. Using a secure element is extremely convenient for passengers. You just tap the phone on the reader, the phone doesn’t even have to be turned or even have any battery power. So, it improves the speed of transport operators’ commercial operations, which means more efficiency when passengers are boarding or buying tickets. Transferring travel cards to phones also cuts down on a lot of unnecessary plastics, making it the sustainable choice.
Mobile phone manufacturers, on the other hand, get to offer new services to customers using a technology that already exists in many phones, and they generate new revenue streams.
Read more about it here.

Why do companies choose to work with Fidesmo?

We are secure element experts. We provide an aggregator platform that connects the different secure element applications with service providers and phone manufacturers in a single integration. When a phone manufacturer comes onboard, they can connect to all our platform partners. They don’t have to develop integrations with different transport providers or digital lock companies, and they don’t have to manage individual license agreements with them. We have already established that. We can even onboard a service provider to our platform on behalf of a phone manufacturer if they wish to offer users specific services.

What other secure element opportunities exist for phone manufacturers?

Today, the phone is almost an extension of ourselves. It’s the one thing we always have with us, yet we rely on – and occasionally forget – other items that can be replaced with a phone’s secure element. A car key is a perfect example. It’s no secret that smart car keys are being cloned by criminals. Using a secure element in a phone would eradicate this problem. Opening a door and starting a car would be just as convenient as the secure element works when the phone is out of battery.
e–Identities is another good example. If your driving license was on a secure element on your phone you wouldn’t have to carry a plastic card around with you. It would be protected with the same high security that is applied to payments, i.e., anonymous digitized credentials, which isn’t the case when the ID is in your wallet.

Finally, how do you expect the market to change?

I expect phone manufacturers to move beyond contactless payments. With so many phones now being produced with an embedded secure element in them, it’s natural for manufacturers to look for new ways to use this to deliver services to customers – and we can help them with that. At the same time, I expect we’ll see a rise in the use of secure elements in general as the security they provide cannot be matched with software. Don’t be surprised if your e-health records are stored on them and you’re paying in digital currency with them in the not-too-distant future!

About Iván Rico – Fidesmo Director Sales and Partnerships Southern Europe
Iván has over 20 years of technical and business experience in the telecom industry. He is a strong believer in developing customer–centric solutions that drive value for all stakeholders.


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