Spanish banking group Banco Bilbao Vizcaya Argentaria is introducing a commercial solution leveraging Host Card Emulation technology through financial service corporation Visa.

The service is available immediately through the BBVA wallet mobile application in Spain. The new cloud-based system will allow BBVA customers with NFC-enabled Android mobile devices to make contactless purchases, making way for a potentially safer, more secure transaction.

“Compared to any third party wallet, our solution allows to the customer to pay with any existing card or account with just pressing a button,” said Javier López Chicote, head of new means of payments at BBVA, Madrid. “Internally we link the token to the product selected by the customer, then the user introduces the PIN on the point of sale, and then we do the rest.”

Closing the gap
Users can use this system in two ways. Those with NFC-enabled smartphones with the Android 4.4 operating system or later can simply download the updated app, but those who do not have an NFC device must request a contactless label that attaches to their phone. These labels enable the user to have the same experience.

Some have argued that cloud-based payments are a more secure option.

Through the cloud-based platform, payment apps are able to run separately from a telephone service operator, which could result in improved user experience.

This implementation could generate more mobile payments across the board if consumers trust the cloud-based software and its levels of security.

The update is currently live in Spain and should be effective in the United States, Mexico and Chile later this year. The BBVA wallet app is available on iOS and Android operating systems.

A growing strategy
Banks have been looking for meaningful ways to insert themselves into the mobile payments equation and HCE technology appears to be gaining steam in more than one sector.

Sberbank, the largest bank in Russia, recently began testing HCE for mobile payments.

With a growing number of banks also giving HCE a close look to see if it is a fit for their own mobile payments strategies, the Russian bank has also been piloting NFC payments on a small scale in Moscow leveraging the secure element in phones (see story).

Recent studies have predicted the move toward HCE.

While mobile-enabled contactless payments have been lagging, changes are being seen with more than 50 percent of wallets in developed markets – and more than a third globally – expected to rely on contactless technology by 2018, according to a recent report from Juniper Research.

Mobile wallets leveraging near field communications technology were first out of the gate on the contactless front but have been slow to gain adoption by retailers and consumers. However, mobile contactless payments are expected to get a boost from Apple’s anticipated launch of a wallet as well as the introduction late last year of Host Card Emulation technology, which is helping to make NFC more widely available (see story).

While HCE remains in its early stages, BBVA expects to see more connectivity among cloud-based platforms across the banking industry.

“Adding the tokenization system to the mpayments space increases the versatility of all the payment solutions in brick and mortar merchants or online,” Mr. Chicote said. “Maybe HCE is the big winner of tokenization, but it has all the ingredients to change the way of a customer pay.”

“After six months live, we have learned a lot. We’ve had more than 200,000 downloads and 80 percent of the customers are opening the wallet everyday. This is a big milestone compared to our regular experience.

“We also learned that our customers are very open to test new technologies. We will continue learning and adjusting the products very quickly,” he said.

Final Take
Caitlyn Bohannon, editorial assistant for Mobile Commerce Daily, New York