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Taking Back Control: Banks Can Finally Launch Full Scope Mobile Wallets on iOS

Today, mobile payments have become increasingly popular, offering users convenience, security, and flexibility. One of the advancements in mobile payment technology is Host Card Emulation (HCE), which enables secure contactless payments using near-field communication (NFC) technology on mobile devices.

ASEE is about to certify Visa & MC HCE solution on iOS platforms

Following Apple's recent announcement of opening NFC-Based Tap-and-Go Technology, we wasted no time in initiating the development and certification of an HCE solution tailored for Mastercard and Visa schemes on iOS platforms.

Looking back at our milestone in 2017, ASEE successfully developed and certified an HCE solution for the Android platform. However, limitations by Apple prevented us from extending this achievement to iOS, until now. We're excited to share that we anticipate offering a complete HCE solution for iOS by the end of 2024.

Nowadays, many banks currently facilitate NFC (HCE) payments through ApplePay integration at physical merchant points. However, this integration does not provide banks with truly complete ownership over their mobile wallet and brings certain challenges.

Challenges of Mobile Wallets Dependant on ApplePay

1. Overall Transaction Cost:

When negotiating transaction fees with ApplePay, the position of major banks is favorable as they often have stronger bargaining power. This would result in lower transaction costs. However, smaller banks may face higher fees due to their limited negotiation power and lower transaction volume. This can impact smaller banks' profitability and competitiveness in the market, potentially leading to higher costs for customers or reduced margins for the bank.

2. Limitation on Supported Devices:

Apple's decision to support specific versions of mobile devices, starting from the iPhone 6 with NFC capability, can limit the bank's potential customer base. As newer devices are released and older ones become obsolete, banks may face challenges in maintaining compatibility with supported devices. Additionally, the need to continually update technology to support newer devices can increase development costs for banks.

3. Inconveniences for Users with Multiple Mobile Wallets:

If a bank offers its own mobile wallet alongside Apple Pay for contactless payments, it may be inconvenient for users to manage multiple wallet applications for different services. This could result in reduced adoption of the bank's own wallet app, impacting the bank's ability to promote its brand and services effectively.

4. Dispute Resolution Challenges:

Any disputes or issues related to transactions made through Apple Pay must be resolved through Apple's channels, rather than directly by the issuing bank. This can prolong the resolution process and potentially result in customer dissatisfaction due to delays in addressing their concerns. Additionally, banks may have limited control over dispute resolution, impacting their ability to provide timely and effective customer support.

With Apple opening their NFC API, banks and fintechs can now overcome the above-mentioned challenges by digitizing credit/debit cards through their own Digital Wallets.

Understanding HCE and Its Benefits

Host Card Emulation (HCE) technology allows mobile devices to emulate contactless smart cards, enabling users to make secure payments without the need for physical cards. By leveraging HCE, banks can offer their customers a seamless and convenient payment experience through their smartphones. The benefits of implementing an HCE solution for banks include:

Enhanced Customer Experience

Embracing Host Card Emulation (HCE) technology enhances the overall customer experience by providing a seamless and convenient payment solution. With HCE, customers can securely make contactless payments using their smartphones, eliminating the need to carry physical cards or cash. This convenience not only simplifies the payment process but also aligns with the preferences of modern consumers who prioritize ease of use and flexibility. By offering HCE-enabled services, banks can strengthen their relationships with customers, increase satisfaction levels, and foster loyalty.

Competitive Advantage

Implementing HCE technology gives banks a significant competitive advantage in the rapidly evolving digital payments landscape. By offering innovative and modern payment solutions like mobile wallets, banks can differentiate themselves from competitors and attract new customers. Also, HCE allows banks to stay ahead of the curve by meeting the changing needs and expectations of consumers who increasingly prefer mobile-based payment options. This strategic advantage not only enhances the bank's market position but also contributes to long-term growth and sustainability.

Cost Efficiency

HCE technology offers cost-saving opportunities for banks by reducing reliance on physical cards and associated infrastructure. With HCE, banks can streamline card issuance and distribution processes, leading to lower operational expenses. Additionally, the transition to mobile-based payments eliminates the need for costly card replacements and maintenance, further reducing overall costs. By optimizing resources and leveraging digital solutions, banks can achieve greater cost efficiency and allocate savings toward strategic initiatives that drive business growth and innovation.

Operational Efficiency

Embracing HCE technology improves operational efficiency for banks by simplifying payment processes and reducing manual intervention. With HCE-enabled services, transactions can be securely completed in real-time, eliminating the need for manual verification or processing. This not only accelerates transaction speed but also minimizes the risk of errors. Furthermore, HCE streamlines backend operations by consolidating payment data and analytics, providing banks with valuable insights into customer behavior and preferences. By optimizing operational workflows and leveraging digital automation, banks can enhance efficiency, productivity, and overall performance.

Simplified Loyalty Programs

Banks that manage their own wallets or loyalty applications can more easily integrate loyalty programs and offer personalized rewards to customers. This can enhance customer engagement, drive loyalty, and differentiate the bank's services from competitors. Additionally, streamlined loyalty programs can contribute to increased customer retention and satisfaction.

Wrap Up

The development and certification of our HCE solution for Mastercard and Visa on iOS represent a significant milestone in the evolution of mobile payments. By embracing HCE technology, banks can enhance their customer experience, gain a competitive advantage, and achieve cost and operational efficiencies. At ASEE, we're excited to lead the way in revolutionizing mobile payments and empowering banks to thrive in the digital era. Stay tuned for further updates on our progress!

If you require any consultation regarding mobile wallets and the underlying technology, feel free to contact us with zero obligation.

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