It finally happened! After enabling banks to add their credentials to everyone else’s mobile apps, including Apple’s, Samsung’s and Google’s, the networks have finally gotten around to enabling a bank’s mobile app. CapOne has stepped up to lead the pack by payment enabling android devices utilizing Host Card Emulation technology, which comes with some risk:
“Android Users Can Now Make Mobile Payments Directly in the Capital One Wallet App
Today, Capital One announced the latest in mobile payment innovation as the first U.S. bank to enable contactless mobile payment capability in its mobile app, Capital One Wallet, leveraging the MasterCard Dig ital Enablement Service (MDES) and Visa Token Service (VTS) platforms. This new solution is another example of Capital One offering choices to people and making their customers’ lives easier.
This mobile payments solution comes as an update to the Capital One Wallet app, which is designed to help customers stay on top of their spending and get the most from their credit card rewards. Capital One customers are able to use their credit and debit cards directly from their phones to make contactless payments for purchases at many of their favorite retailers.”
The technical implementation, which brings some risk into the picture, as well as additional benefits that CapOne will deliver through the app, are also discussed:
“So how does this work?
Capital One will use NFC enabled Android phones to transmit a secure payment token to the point of sale. These are accepted anywhere contactless payments are accepted. Any user with an Android phone using an operating system v4.4 (Kit Kat) or higher and with NFC, can now use the Capital One Wallet app to pay for goods and services directly at the point of sale. This includes almost all new Android smartphones offered today.What else is helpful about the Capital One Wallet?
Besides payments, the Capital One Wallet app offers additional valuable features that help customers manage their spending, including real-time notifications for all transactions, instant rewards redemption options, and easy access to balance and transaction history.”
The delay in introducing payments into bank owned apps was due to the payment network’s decision to support the launch of Apple Pay, quickly followed by Android Pay and Samsung Pay. At the same time, expanding into Android without a Secure Element required far more fraud management technology built around Host Card Emulation (HCE), which has been deployed in Europe more broadly than in the US. It can be assumed that CapOne will utilize MasterCard’s and Visa’s fraud management solution, but this still implies that CapOne has decided it can manage the risk inherent in that decision, as described in the blog “Barclays’ Rollout of HCE Identifies the Unique Challenges U.S. Banks Face.” As described in that blog, HCE solutions in Europe have managed risk by limiting spend to under 30 euros, although Barclay’s just increased the limit it supports to 100 euros.
This announcement is important and Mercator looks forward to the day when all banks can have its mobile app payment enabled, not just on Android but also on Apple’s iPhones. The ball is in Apple’s court.
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
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