Russia’s Largest Bank Plans to Launch HCE; Continues to Pursue Embedded Chips in Parallel

Russia’s largest bank, Sberbank, said it plans to launch NFC-mobile payments with host-card emulation this fall, the first major bank to disclose plans for an HCE launch.

A representative of the bank told NFC Times it plans to launch HCE first with a Visa payWave application and would likely follow with MasterCard PayPass.

If the bank makes good on the plans, it could boost HCE technology, which, while gaining the endorsement of both Visa and MasterCard Worldwide and enjoying growing interest among financial institutions globally, still lacks maturity and hasn’t yet been rolled out commercially.

Sberbank earlier this year failed to launch a planned NFC mobile-payments service on embedded chips in partnership with Samsung and Visa in time for the Winter Olympics in Sochi.

But the bank told NFC Times it hasn’t abandoned the plans to launch on embedded chips, which the representative, Mircea Mihaescu, managing director of Sberbank Digital Ventures, considers as more secure than HCE. The bank would probably launch first with MasterCard PayPass on embedded chips, he said, despite having worked with Visa payWave in the past for the aborted Sochi launch. He said the target is also in the fall for launch of the embedded payments service.

Sberbank did not have details firmed up on either launch, however, including phone models.

The bank will be using U.S.-based vendor Sequent Software for both projects, the HCE-based service using a “digital issuance” system Sequent recently announced.

Sberbank is also an investor in Sequent, its venture capital arm having contributed the lion’s share of Sequent’s $12 million series B funding round announced last summer. But Mihaescu insisted the bank’s planned commercial launch of HCE-based mobile payments in the fall is not a pilot or demonstration of the technology.

“We are done with trials,” he said. “I’ve had four to five commercial pilots. The value will come from actual commercial deployment.” 

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Among Topics Covered: 

  • Plans by Russia’s Sberbank to launch host-card emulation commercially and customer take-up target
  • Views on security and maturity of HCE compared with secure elements
  • Why Sberbank continues to plan to use embedded secure elements in addition to HCE
  • Reasons, according to the bank, behind the abortive attempt to launch mobile payments on embedded chips with Samsung and Visa in time for the Winter Olympics in Sochi.
  • Sequent’s “digital issuance” offer and relationship with Sberbank
  • Sberbank’s possible use of Samsung Galaxy S5, which will not pack an embedded chip for units shipped to Russia
  • Another Russian bank planning to launch PayPass on embedded secure chips 
  • Contactless point-of-sale terminals deployed by Sberbank

Among companies and organizations mentioned:

Sberbank
Samsung Electronics
Visa
MasterCard Worldwide
Sequent Software 

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