NFC Times Exclusive: As 2014 unfolds, the NFC ecosystem appears as unsettled as ever, with embedded secure chips expected to compete with NFC SIMs in several markets to store applications, and Google throwing its weight behind an alternative that could eventually enable service providers to avoid secure elements altogether.

Google’s backing of host-card emulation in its latest Android operating system, announced in late October, is expected to get its first major tryouts in 2014, and major payment schemes are expected to offer some clarity on whether they will accept the security and performance of the technology for their brands. It’s available only on Google’s own devices so far for use with Google Wallet.

Host-card emulation, or HCE, enables banks and other service providers to host services in apps and credentials in the cloud, while making use of the phone’s NFC interface and growing base of contactless card terminals in the field. HCE potentially allows them to avoid working with telcos or other secure-element owners and being part of mobile operator wallets. But HCE technology is still maturing.

Meanwhile, despite what many would consider another disappointing year for NFC in 2013, the world’s largest mobile operators and operator groups either launched their first commercial services during the year or announced plans to do so for 2014–all using NFC SIM cards to run mobile-payment and, in some cases, other applications.

Take-up so far has been slow for services already launched, but the rollouts will continue. And among the most watched will be the NFC-enabled wallet from the Isis joint venture, made up of the two largest U.S. telcos, Verizon and AT&T; along with T-Mobile USA. They launched their Isis Mobile Wallet in November.

In addition, Chinese telcos, led by China Mobile, also introduced NFC services in 2013, with broader rollouts expected this year; while UK-based Vodafone Group began its country-by-country rollout in Spain and Germany, with at least three more markets to follow by early 2014.

The launches on NFC SIMs are expected to build take-up by consumers slowly and appear to be a long-term play by the telcos.

And as the year came to a close, the first banks introduced mobile payments on embedded chips in Samsung NFC phones, with the most significant project launched by Commonwealth Bank of Australia, working with MasterCard Worldwide. MasterCard said that at least three more banks, in Russia, Ukraine and Turkey, would follow in the early part of 2014. Visa, following delays, also plans to launch with at least one partner bank, Westpac of Australia, on Samsung embedded chips early in the year. More launches are expected. 

In this, the third installment of its Year Ahead series, NFC Times takes a detailed look at trends for NFC in the coming year and a geographic breakdown of expected projects for 2014: 

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Trends to Watch for NFC in 2014, including:

• HCE Announcement Shakes Up Market
• Embedded SEs: Situation for Launches in 2014
• Telco Deals with Payments Schemes to Bear Fruit
• Simplifying the NFC Ecosystem: GSMA, Payment Schemes to Take Action
• Nonpayment Applications Making Some Progress

Geographic Breakdown for 2014, including:

• Showtime for Isis in a Fragmented U.S. Market
• Canadian Wallet Projects on Tap
• Telcos Hope to End Delays in Europe
• Briefs on activity in Turkey, Spain, Hungary, Slovakia and Czech Republic
• Germany–infrastructure remains small
• France–Nationwide Launches Finally at Hand?
• UK–More Telco Payment While Waiting for Weve
• Poland–Battleground for Card Schemes
• Asia–Home of Firsts, Though Take-Up Lags
• Activity in South Korea and Japan
• China–Large Players Expected to Ramp-Up Service
• Taiwan–Prime Market for NFC Likely to See Fragmentation
• Hong Kong–Expect Multiple Secure Elements 

Among companies and organizations mentioned:

Google
Visa
MasterCard Worldwide
China UnionPay
American Express
Isis
Samsung Electronics
China Mobile
Royal Bank of Canada
Bankinter
Commonwealth Bank
Westpac
Vodafone
Deutsche Telekom
Orange
Sony
LG Electronics
Rogers Communications
NTT DoCoMo
Sprint 

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