Bell ID plans to offer software that will improve the appeal of Near Field Communication technology as a contactless payments option and quell debates over who should control the secure element in a phone handset.

The Dutch vendor offers a cloud-based secure element, which it says allows payments providers to support NFC mobile payments without striking deals with handset manufacturers or mobile network operators.

The secure element holding the consumer's payment data is typically embedded in the handset of the mobile phone. A mobile network operator, a mobile wallet provider or a credential-issuing bank could manage the secure element in a handset, depending on the payment system in place.

With Bell ID's technology, when a consumer initiates a transaction at an NFC-enabled terminal with a mobile phone, software allows the mobile phone to access the consumer's NFC credentials from cloud storage. The credentials are then sent through the mobile phone to the contactless payment terminal, the company says.

The turf war over the secure element has been a major barrier to the expansion of NFC in payments, says David Orme, Bell ID's chief executive.

"It has meant that consumers are still waiting for widespread mobile payments solutions to hit handsets and app stores," Orme states in a June 6 post to the company blog.

Verizon Wireless and Google Inc. have carried on the most public debate over access to a secure element in a handset. The debate came to a head this year when the FCC opened an inquiry into why Verizon, one of the companies behind the Isis mobile wallet venture, would not allow Google Wallet to operate through the secure elements on its handsets.

Late last year, French semiconductor technology provider Inside Secure attempted to resolve such conflicts by introducing a secure element that could support multiple owners.

With Bell ID's system, no intermediaries are necessary to access the secure element, Orme says. "This narrows the gap between application issuers and customers, ensuring a consistent brand and user experience across all available NFC services," he adds.

The cloud also allows developers to have easier integration with third parties, while enjoying lower costs and better security, Orme says. The storage capacity for the secure element in the cloud is far greater than on a physical secure element in a handset, Orme adds.

The Bell ID software will be fully compatible with contactless payment terminals that support the EMV-chip card standard, presenting data in the same format used in standard card-present transactions, Bell ID states in a press release. The secure element in the cloud can also pre-authorize payments, allowing consumers to make transactions even when a connection to the server cannot be established, Bell ID says.

Bell ID's technology supports instant fraud detection and allows immediate blocking of an application when necessary, the company states.

But the biggest advantage that the Bell ID software provides is avoiding "the territorial disputes over the secure element," says David Kaminsky, analyst for emerging payments with Mercator Advisory Group.

"With storage in a remote server, ownership of the element is not an issue because it is very clear what needs to be done to access the element," Kaminsky says.

The secure element in the cloud represents a stronger security mechanism than having the chip in a handset, Kaminsky says. "If you lose your handset, you lose your secure element," he adds.

Bell ID and other companies that offer a cloud-based secure element "are putting up heavy security for that central storage," Kaminsky says. However, there remains the hypothetical possibility that a hacker could gain access to a cloud-based system, he adds.

Even though the Bell ID software should gain some interest from issuing banks and mobile wallet providers, it may still not be enough to trigger a surge in NFC mobile payments, Kaminsky says.

"Those of us who are payments professionals have to remember that NFC is not just a payments technology," Kaminsky says.

If consumers begin using other NFC-based systems, such as sharing photos through mobile phones, they will find it much easier to eventually accept it as a way to make payments, Kaminsky says.

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