01 August 2014

Sberbank preps SE and HCE mobile wallets

09 June 2014  |  4816 views  |  4 NFC 3

Russia's Sberbank is preparing to introduce both Secure Element- and Host Card Emulation-based mobile NFC payment wallets in a decision that reflects the different "risk profiles" of the two technologies.

Testing of the Secure Element-based wallet is already underway in Moscow, with the bank working with manufacturers Samsung and HTC to embed the SE within the handset, rather than the SIM. Pilots of the HCE-based system will begin soon.

Both systems use recently launched digital issuance technology from Sequent Software, a US vendor in which Sberbank's VC arm, SBT Venture Capital, led a $12 million funding round last summer.

Sberbank's MD of digital ventures, Mircea Mihaescu, tells Finextra that the bank is not testing both secure element- and HCE-based wallets in order to decide which to launch commercially. Rather, the two are likely to be offered side-by-side because they have different "risk profiles".

Although cloud-based HCE has been gathering momentum and credibility in recent months, there are still questions about its security, with SE advocates such as the SIMalliance arguing that the new technology is inherently less safe.

The Sberbank SE wallet will have a higher transaction limit, says Mihaescu, reflecting the robust nature of its security while the HCE offering will be used for lower-value transactions.

Meanwhile, the bank hopes to encourage usage of the wallets by tapping into Sequent's APIs, which can give third party apps access to customer cards for payments.

The pilots are the first major exercise for Sberbank's new digital ventures unit, which operates outside the bank and is tasked with launching controlled experiments in the real world. Mihaescu stresses that, in this context, both pilots are formalities, "stage doors," to commercial roll outs.

Comments: (4)

Alexander Peschkoff - TEDIPAY - London | 09 June, 2014, 11:36

It's not about "side-by-side". There are only two or three smartphones with embedded SE. Hence, the rest have to rely on HCE.

If eSE were available in every phone (and mobile operators did not stand in the way), it's a no-brainer for banks.

There are many strong reasons why SE beats HCE hands down. Mass transit is one of them. Wearables is another.

A Finextra member | 09 June, 2014, 14:52

Alexander - good point.  Do you think its worth the investment for banks to toggle between technologies(HCE/SE) based on whats available on the handset?

Alexander Peschkoff - TEDIPAY - London | 09 June, 2014, 14:58 That is exactly the problem! Almost non-existent base of phones with eSE, (still) limited availability of NFC, iron fist of mobile operators - your choices are limited. To achieve wide adoption you need ubiquity. To achieve ubiquity, you need some "common ground". That's why banks are excited about alternative form factors (such as our smartwatch with eSE and contactless interface).
Charmaine Oak - Shift Thought - Bristol | 01 July, 2014, 06:58

Interesting, but how does the consumer choose. As a consumer, I would hate to be faced by two alternatives with different "risk profiles" - I would want someone to choose the safest and give me just that. Reminds me of the multiple mobile payment standards launched in China, before they decided to go for NFC.

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