Clashing over the NFC Secure Element for Platform Leadership in the Mobile Payment Ecosystem

Abstract

This paper explores how the control over the Near Field Communication (NFC) secure element could provide platform leadership in the mobile payment ecosystem. During a decade of trials, firms from different industries struggled to launch proximity mobile payment platforms to pay at physical point-of-sales. Mobile payments platforms are complex socio-technical systems that need to combine an array of resources and capabilities from different firms. The implementation of NFC platforms requires to store financial credentials of consumers in a secure element (SE). The industry designed several competing platform architectures for the secure element: SIM-centric, device-centric, SD-centric, and Host Card Emulation (HCE). Each of these alternatives gave more or less control to the different firms involved in the mobile payment ecosystem. For years, firms promoted the architecture which would give them more control. Over the time, this struggle just hindered the emergence of successful mobile payment platforms. The recent emergence of new actors (e.g., Google, Apple, Samsung) raised optimistic prospects for future developments. This paper provides a strategic analysis of the mobile payment ecosystem by studying the relationship between SE architectures and the establishment of platform leadership by incumbents and emerging actors.