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Can Mobile Network Operators Regain Relevance In the Mobile Payments Space?

Most of the payments industry pundits agree that the Mobile Network Operators (MNOs) lost relevance in the payments space, after which Apple Pay was launched and Google acquired SoftCard, going on to release the Host Card Emulation (HCE) framework. The original NFC mobile payments ecosystem that the MNOs were pushing forward was awkwardly complex to start with. The setup required running expensive Trusted Service Managers (TSMs). MNOs needed to negotiate complex contracts with card issuers and payment networks. MNOs wanted to charge each card issuer for the real estate inside the SIM card. Things were further complicated by the fact that the ownership and control of the mobile phone’s ubiquitous SIM SE was very unclear. Technically the SIM is owned by the MNOs, but it is the card issuer who traditionally has the ownership of the payment card chip. Who would now own the SIM, which should host the GSM applet plus multiple EMV applets from multiple card issuers? This complexity at some point jeopardized the future of NFC itself.

Apple Pay visibly simplified and even eliminated most of these complexities, breathing new life and hope into the NFC ecosystem. Apple fully owns and controls the iPhone 6 embedded SE which comes preloaded with single generic EMV payment applet instances, per supporting payment brand (no need for an instance per issuer anymore). Consume ...

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