Both MasterCard and Visa announced plans to endorse a mobile payments technology that will let you use your Android phone to pay for things with a simple tap, Re/code reports.
The technology — called host card emulation, or HCE — is built into the latest version of Android’s operating system. It essentially allows payment card info to be stored in the cloud, where mobile apps can access it.
It was a big deal when Android baked HCE into its software because, traditionally, mobile payments relied on NFC — or near field communication — which needs to be built into hardware embedded in phones. (With NFC technology, you can tap two devices together and have them exchange info.)
Because NFC technology is hardware-based, mobile carriers like Verizon and AT&T have all the power, and can control which apps can access the data it stores. With HCE, though, mobile carriers don’t have the power; apps can access the data from the cloud and then use NFC to communicate with other devices.
So who does have the power in the case of HCE technologies? The credit card companies that decide whether they will allow their card details to be stored in the cloud.
So that’s why it’s a huge deal that two major companies — MasterCard and Visa — gave the thumbs up to HCE technology. Now, businesses can start building payment features into their Android apps that will work no matter what phone carrier a user has. Re/code notes that banks in particular could take advantage of this new certification to be the next big players in the world of in-store mobile payments because they already have high consumer trust and lots of people using their apps.
For more analysis, head over to Re/code.