You make a mobile payment when you tap your phone to a contactless point of sale terminal and the terminal takes the payment by reading your credit or debit card information – just as if you were tapping your plastic card, or inserting it and using chip and PIN.
- The Secure Element (SE): The SE is a chip-based platform where secure credit and debit card credentials can be stored. The SE can be on a removable SIM card or microSD, or be embedded n the phone itself.
- The TSM: The Trusted Service Manager (TSM) is the technology platform that links financial institutions and other credential issuers (Issuers) and mobile network operators (MNOs). There are two sides to the TSM. On the Issuer side is the Service Provider TSM, or SP TSM. On the MNO side is the Secure Element Manager, or SEM (also called the Root TSM). Sometimes the two are provided by separate entities, but EnStream provides both.
- The Smartphone: Samsung, BlackBerry, HTC, LG all make devices that have both an NFC antenna and NFC-payment-capable secure elements, as does the new Apple iPhone 6.
- The Wallet: This is the application on the screen of the user’s smartphone. Current in-use versions are simple, single-bank-specific payment applications. More complex wallets such as SureTap and UGO are not limited to one Issuer, but allow the customer to pick and choose ‘cards’ from the wallet, including loyalty ‘cards’, gift ‘cards’, downloaded ‘coupons’ and marketing offers, and, into the future, identity cards, such as government-issued licences and health cards.
- The Process: Jane asks her bank to download her credit or debit card credentials, over the air, to her phone. The downloading is virtually instantaneous. Now, to pay for her coffee, or her groceries, she can tap or wave her phone at the contactless terminal to pay, just as if she had inserted her card into the terminal (using Chip and PIN), or whether she had tapped or waved her card (using payWave or PayPass). The terminal ‘sees’ her credit or debit credentials just as if she had tapped or waved or inserted the plastic card.
- For the Retailer : The process is form-agnostic. The interchange fees do not change – if Jane uses a credit card, the merchant’s fees are the same whether the plastic card is inserted into the terminal with chip and PIN, whether the plastic card is waved over the terminal or whether the ‘card’ credentials are inside the phone.