Near field communication (NFC)
mobile payment service in Hong Kong Industry Forum
Peter Pang
Deputy Chief Executive
Hong Kong Monetary Authority
25 November 2013
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Commenced NFC study
Collected feedback from the local market on NFC mobile payment
Recommended a
development strategy fit for Hong Kong
Aroused interest of the market and the public in NFC mobile payment
Formulated development strategy
Formulated the four long- term development
objectives in NFC mobile payment
Support a market-driven approach for shared
infrastructure development
Facilitated the formation of NFC task force under the Hong Kong Association of Banks (HKAB)
Develop guidelines and standards
Facilitated the discussion and finalisation of the Best Practice with HKAB
Continue to monitor and support the development of NFC mobile payment in Hong Kong
Q3 2012 March 2013 November 2013
HKMA’s effort in promoting NFC mobile payment
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1. Payment service issuers gradually launched NFC mobile payment services
4 banks launched NFC mobile payment services, compared with 1 bank last year
1 more bank has recently announced the launching of NFC mobile payment service in the near future
2. Mobile payment products extended from credit card to stored value card
A stored value mobile wallet was launched in October 2013
3. Development of shared infrastructure
A card association will complete the development of shared infrastructure early next year to support
mobile payment services to be launched by its member banks
Market development in 2013
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Forecast for next year’s development
1. New market participants joining the market
Other than existing players which already include 5 banks, 1 stored value card association and 2 card associations, other banks and card associations are planning to launch NFC mobile payment services
2. More mobile network operators (MNOs) supporting NFC
In addition to 2 MNOs which have launched of NFC mobile payment services, 2 more MNOs will launch the services next year
3. Multiple payment cards on a single SIM card
Product suppliers are working on a technology breakthrough to integrate both credit cards and stored value cards on a single SIM card
Diversified market development and the development of shared infrastructure leading towards an interoperable environment
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An NFC task force established under HKAB has worked with the HKMA to discuss and agree on a set of standards and guidelines
After a few months’ effort, the Best Practice is issued by HKAB as an industry guideline for its member banks to follow
The Best Practice covers the following areas:
1. Security requirements : to ensure security of services
2. Technical standards：to facilitate interoperability among different NFC infrastructures, mobile devices and terminals by adopting widely applied industry and international standards
3. Operational processes : to enhance user experience by introducing standardised operational process
Issuance of Best Practice
Four development
objectives
Mobile payment services
Mobile payment infrastructure
Best practice
Facilitate interoperability among different infrastructures with common standards and guidelines
Best Practice supports the long term development of NFC mobile payment
High level of security enhances user confidence Achieve the long term objectives of interoperability and a high level of security
Pave the way for the long term
development of NFC mobile payment End-users
(To benefit from market development)
Service providers (e.g. banks)
HKMA HKAB
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The HKMA will take into account the security requirements in the Best Practice in its supervision of NFC mobile payment services to maintain a consistent and high level of security
The security requirements include measures:
to secure the generation, transmission and storage of payment card data in mobile payment infrastructures
to ensure security during the execution of payment transactions
to protect payment card data and transaction data
Best Practice – security requirements
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Adopt technical standards set by industry and international organisations
For example:
ISO standards: specifying the communication protocols between mobile phones and contactless readers
ETSI standards: specifying the communication protocols between mobile phones and secure elements
GlobalPlatform standards: specifying the protocols on TSM-to-TSM communication and secure element architectures
EMVCo standards: specifying payment card security and personalisation
Best Practice – technical standards
ISO : International Organization for Standardization ETSI : European Telecommunications Standards Institute EMV : Europay, MasterCard and Visa
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Bank
Encrypted channel
Payment card data should be generated and stored in a secure environment
They should be transmitted in encrypted channels
Best Practice at a glance
NFC infrastructure/TSM Secure element
Mobile network
NFC-enabled mobile phones
Encrypted channel
Payment card data generation Credit card
data
Secure environment
Secure environment Secure
environment
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Best Practice at a glance
Security access interface
Secure element
As a secure element can store multiple payment cards issued by different banks, only authorized mobile wallet applications can access the
assigned payment cards stored in the secure element.
Bank B payment
card Bank A
payment card
Bank A m-wallet
Bank B m-wallet
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Users can check transaction histories with mobile payment applications
Best Practice at a glance
Transaction details can be reviewed in
real time.
Recent transactions:
$54 25/10 Eight Twelve
$267 25/10 Wattbird
$62 26/10 Easytrans
$133 27/10 CoffeeGood
Pay Info Settings
Bank Card 3
Bank Card
Bank 2
card 1 Bank Wallet
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Mobile credit cards follow the existing no-signature limit on contactless credit cards. Currently, the highest limit is HK$1,000 per transaction.
If the transaction amount exceeds the limit, additional security measures, such as signature or password, are required.
Best Practice at a glance
Per transaction value Within the transaction
limit
Exceed the transaction limit
Payment
Operation Tap your card Require additional security measures
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Best Practice is conducive to a favourable market environment
The Best Practice enables banks, mobile network operators and card associations to launch new NFC mobile payment services based on the same set of standards and guidelines, helping to achieve the four development objectives and interoperability among different services in the long-term.
The HKMA will take into account the security requirements of the Best Practice in its supervisory process. Together with Hong Kong’s
favourable market conditions, this will enhance public confidence and build a solid foundation for the wide acceptance of NFC mobile
payment services in Hong Kong.
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