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NFC Secure Element Issue No SIM-ple Matter: Key Questions Surface at London Underground

SIM-based secure elements (SEs) do not meet the performance requirements for applications—such as transportation ticketing—where customer throughput is a key metric. Well, this is at least the opinion of Shashi Verma, the Director of Customer Experience of the London Underground. Verma recently went on record stating that current SIM-based SEs are too slow to deliver the required levels of passenger throughput on London’s public transport network. The critical question of SE ownership is a contentious issue that could potentially delay the broad deployment of secure NFC applications—such as ticketing, contactless payment and security/access control. While this recent development at the London Underground does not provide any clear resolution to this complex issue, it sends several clear messages to stakeholders in the NFC market:

  • Change is not always for the better: Earlier NFC ticketing pilots leveraged smartphones with embedded (as opposed to SIM-based) SEs and delivered acceptable passenger throughput levels for ticketing. More recently, SIM-based SE architectures have become favored by MNOs, despite the fact this design slows transaction times. This brings to mind the adage “If it’s not broken, don’t fix it.”
  • Vendor interests must be subordinate to those of the end users: The aforementioned shift to SIM-based SE architectures was driven in part by MNOs’ efforts to capture revenue derived from SE ownership, since the MNO generally owns the SIM card. However, if SIM-based architecture is inadequate to support secure applications, the question of SE ownership becomes a moot point—the SE will not be leveraged for these applications anyway, since it may fail to deliver on any number of performance metrics—with the key issues in the case of the London Underground being transaction speed and throughput. NFC vendors must act with the interests of their customers in mind—money-grabbing schemes ultimately benefit no one.
  • Now is the time to get the NFC SE right: Time is of the essence for NFC vendor-stakeholders to resolve issues surrounding the SE and bring NFC to the mainstream. Despite broad availability of NFC-enabled smartphones and robust consumer interest in secure applications such as ticketing and m.payment, activity has been sporadic as issues such as SE ownership have hamstrung early secure application efforts. With the relentless pace of technology innovation today, the window of opportunity “to get NFC right” is finite and fleeting. If NFC vendors fail to meet the requirements of prospective end users, competing solutions/providers will capture these opportunities. NFC already faces outside competition in the realm of payment, with cloud-based solutions from companies such as PayPal vying for supremacy in m.payments.

The contentiousness surrounding SE ownership is understandable, as control over this critical device component has considerable implications in regards to a stakeholder’s ability to generate new revenue streams from the enablement of certain secure applications. While MNOs seem to be the early leaders in the battle for SE control, this issue is far from resolved, especially in respect to which SE architecture(s) will ultimately be favored. The questions surrounding SE ownership and architecture are just two of the complex issues we will address in our upcoming NFC: Voice of the Customer Series. Contact us for more information.

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