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Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G.

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Presentation on theme: "Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G."— Presentation transcript:

1 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 UL and the UL logo are trademarks of UL LLC © 2014 NFC based payment: how will it develop relative to upcoming alternative approaches? Hong Kong | March 2014

2 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 About UL… Be the best, and achieve meaningful size in all that we do Certify Validate Test Inspect Audit Advice & Educate We Safe products Safe buildings Safe workplaces Safe water, food & health Safe, clean energy

3 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 Compliance Security About UL Transaction Security Working towards a safer world by being the number one independent center in Transaction Security Technology Unrivalled expertise across industry domains State-of-the-art services/products portfolio Recognition in our local markets – Thought Leadership Scalable offering Service offering

4 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 UL supports worldwide many mCommerce initiatives with advisory services Weve ISIS “UL staff has been extremely valuable to ISIS in supporting the testing and integration of our TSM.” “.. the UL team always considered any issues beyond just the technical aspects and looked at the wider commercial and customer implications, which was and is invaluable for us.” “The strategic workshops hosted by UL TS at the start of our project were crucial to create a common vision and helped us to speed up the project” “The effort from the UL team has been crucial for our project. Their competence, attitude and hard work have been inspiring for us all.” Customer References DNB & Telenor Mobiel Betalen Nederland

5 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 Agenda Alternative approaches to NFC-based payments Alternative to SE-based NFC implementation Impact and Outlook

6 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 QR/Bar codes: remotely-based Trigger redirects payment transaction to e-money transfer Lifecycle management E-Money Service Merchant’s physical shop Authentication and payment transaction (e-money transfer) Internet

7 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 Bluetooth Low Energy: remotely-based Trigger redirects payment transaction to e-money transfer Lifecycle management E-Money Service Merchant’s physical shop Authentication and payment transaction (e-money transfer) Internet

8 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 BLE: How does it work? User experience perspective Proximity marketing when consumer passes nearby B&M store Cashier submits payment from the POS by selecting customer from list of nearby checked-in customers Consumer is checked in at the store As the consumer enters a micro- region at the store, he receives personalized deals or coupons Cashier verifies identity of consumer using visual inspection. Customer chooses payment scheme Consumer approaches cash register to choose payment scheme and give verbal approval for payment The Beacon network at the store is aware that consumer is in the area and “checks him in” after he approves so. POS detects presence of customer nearby. List of customers nearby is re- sorted The POS is equiped with a beacon as well

9 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 BLE: Business opportunities Proximity marketing Micro Location-based notification Customized marketing Specific directions Indoor mapping “Contactless payments”

10 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 BLE versus NFC BLE and NFC are both short range wireless data transfer technologies, even though the range at which BLE operates is much longer. Tens of meters compared to a few centimeters for NFC Between both technologies there are minor differences in power consumption Whereas NFC is focused on one-to-one data exchange, BLE allows for multiple simultaneous connections Both BLE and NFC utilize AES-128 bit data encryption and pairing modes The principle underlying use for both technologies is different

11 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 “Traditional” NFC Handset Tag Handset Terminal Read / Write mode Peer 2 peer mode Card emulation mode Host CPU Secure Element Scope

12 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 SE-based NFC: proximity-based SP-TSM NFC Lifecycle management SEI-TSM Merchant’s physical shop

13 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 High investments Complex network Immature business arrangements... Low degree of standardisation High degree of collaboration needed Challenge for SE-based NFC Card Emulation: SEI ≠ SP Physical cards: SEI = SP Physical cards: SEI = SP NFC Card emulation: SEI ≠ SP NFC Card emulation: SEI ≠ SP Perso bureau Card vendor BPO Supply contract SP SP TSM SEI TSM BPO Supply contract Card vendor Supply contract SP SEI

14 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 Android KitKat’s HCE promises to change that

15 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 Host-based Card Emulation AIDRouting Rule DefaultHost AID YSecure Element NFC Controller Host CPU Android OS Contactless smartcard reader Secure Element Select AID “x” Select AID “y” Android device

16 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 Android has in-built security mechanisms (e.g. sandboxing). These may be over-ruled in case the device is rooted. HCE takes place in environment that is not secure: the host NFC Controller Host CPU Android OS Contactless smartcard reader Secure Element Select AID “x” Android device Device rooting

17 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 HCE & Cloud solutions. Device Authentication. Key Management. Tokenization. Token storage. PCI requirements. Host physical and logical requirements.

18 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 HCE accelerates the NFC ecosystem NFC Ecosystem is getting ready to scale up: Device support Consumers are used to access services from mobile devices Infrastructure is growing With HCE SPs have the freedom to choose for the HW security or not SE access discussions are however delaying development, while many services do not require top-level security from day one

19 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 HCE impact on NFC ecosystem Impact onExplanation SPsAre given an additional degree of freedom App development Enhancing the security of HCE applications Existing wallet and payment apps to be updated TSM The role of (SP-)TSMs may change from the personalization of an applet to the personalization of an HCE service. SEI (& SEI TSM) The role of the SEI is removed (or much lighter) for HCE services

20 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 Example 1: HCE for open-loop high value payments SP’s compromise point-of-view Pro Convenience Reduced costs Less players + no SE issuers Con Decreased security High potential losses Certification unclear (yet)

21 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 Example 2: HCE for low value payments, closed loop systems, transit, access control SP’s compromise point-of-view Con Decreased security Low potential losses Compatibility Pro Convenience Reduced costs Less players + no SE issuers

22 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 Summary Alternatives approaches are available, all bring their own challenges. Cash and Physical cards are still the most commonly deployed 22

23 Red 1 R 193 G 0 B 54 UL Corporate Colours Red 25% R 149 G 7 B 38 Red 50% R 99 G 4 B 25 Tan R 209 G 199 B 182 Tan 25% R 171 G 153 B 122 Tan 50% R 120 G 104 B 76 THANK YOU.


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