Thales: Trust in the cloud or trust in the phone – what next for mobile payments?
Will the arrival of phone based payments act as a revolutionary or evolutionary force?
CARTES, Paris, France – 6 November, 2012 – Thales, leader in information systems and communications security, looks at the approaches for the successful mass adoption of mobile payments among issuers, card schemes, acquirers, merchants and consumers and asks whether the arrival of emerging mobile payment technologies and increasingly secure cloud services will act as a revolutionary or evolutionary force?
The payments industry was defined in an era before the internet, smartphones, the app store and the cloud. As a result any new payments ecosystem built around mobile and cloud connectivity could look very different to the world of payments we are currently familiar with – to both the industry and consumer alike.
To date the most widely discussed and broadly standardized approach to mobile payments has been evolutionary and has focused on effectively turning the phone into a credit card or a wallet full of credit cards. In this model, card issuers, card schemes and acquirers, play a familiar role despite ceding some control and power to new entrants such as Trusted Service Managers (TSMs), Mobile Network Operators (MNOs) and even handset manufacturers.
They collectively depend on the presence of a specialist security chip within the phone – known as the Secure Element – to protect the critical payment keys that enable the consumer to initiate a contactless mobile transaction at a point of sale terminal, just like the embedded chip in an EMV enabled plastic payment card world.
However, players such as PayPal, Google, Apple and a host of innovative start-ups like Square, take a different approach. Their trust lies in the cloud and the phone is simply a means of connecting to that cloud. The argument being that it is much easier to secure a common cloud service than millions of individual phones and much more in intuitive for users to simply log-on to a service – something they do every day.
Which of the two models is likely to stimulate the successful mass adoption of mobile payments – the secure element model or the cloud-oriented approach – and what are the opportunities and threats to gain or lose market share? See the table for a high-level comparison of the two potential models and take a look at our new white paper ‘Trust in the Cloud or Trust in the Phone: Security Fundamentals for Contactless Mobile Payments’.
Ian Hermon, mobile payment security specialist at Thales e-Security says
“As an industry we have been talking about the arrival of mobile payments for almost a decade now. Whilst we have seen big players in the retail market, such as Starbucks, invest in mobile payment platforms we are still a long way off from having one universally accepted model. Whether the industry moves to place its trust in the handset or in the cloud, one thing is for certain, the system as a whole will need to be protected from compromise or misuse. Thales is a leader in both the traditional payments ecosystem and in the broader data protection and cloud security markets. Thales hardware security modules (HSMs) are already proven to satisfy the high assurance security requirements of the banking industry and we are therefore exceptionally well placed to help our current and prospective customers implement a comprehensive security infrastructure that embraces both the traditional and the emerging payment worlds.”
Visit us at Cartes 2012, 6-8 November, Paris-Nord Villepinte exhibition centre, Stand #074
Tuesday, 6 November – 9:40am
Who will win in the era of mobile payments?
Ian Hermon, Thales and Zilvinas Bareisis, Senior Analyst Banking, Celent will discuss the new initiatives in mobile payments and the security challenges these pose.
Session reference: C06 – Mobile Services: The Wallet Generation
Supporting resources:
- Trust in the Cloud Trust in the Phone: Security Fundamentals for Contactless Mobile Payments
- Anything you can do, we can do better: the merchant response to mobile payments
- Video blog: Trust in the cloud or trust in the phone?
- Encryption in the Cloud report
- Global Encryption Trends study
- Thales e-Security
About Thales e-Security
Thales e-Security is a leading global provider of data encryption and cyber security solutions to the financial services, high technology, manufacturing, government and technology sectors. With a 40-year track record of protecting corporate and government information, Thales solutions are used by four of the five largest energy and aerospace companies, 22 NATO countries, and secure more than 80 percent of worldwide payment transactions. Thales e-Security has offices in Australia, France, Hong Kong, Norway, United States and the United Kingdom. www.thales-esecurity.com
About Thales
Thales is a global technology leader for the defence & security and the
aerospace & transport markets. In 2011 the company generated revenues of €13 billion with 67,000 employees in 56 countries. With its 22,500 engineers and researchers, Thales has a unique capability to design, develop and deploy equipment, systems and services that meet the most complex security requirements. Thales has an exceptional international footprint, with operations around the world working with customers and local partners. www.thalesgroup.com
