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Android Market Share at 85% Bodes Well for HCE

Host Card Emulation (HCE) technology support is growing by leaps and bounds. Since it was introduced in the KitKat version of Android Operating System, HCE support in smart phones has been growing in a steep curve. Last month Google released new usage numbers showing that 25% of all smart phones running Android OS are already doing so with KitKat. That’s a healthy 17% month-over-month increase from the number just released in August.

What’s more, as most OEMs and MNOs roll out phones with the new operating system, KitKat OS penetration is even higher among the new smart phones being shipped. Google has been very committed to bringing OEMs to the new platform; leading us to believe that eventually all new Android OS smart phones could have HCE support.

When that happens, a whopping 85% of all smart phones shipped, the global Android market share, would support HCE. Numbers released by the research firm IDC for Q2 2014 show that 84.7% of all smart phones shipped globally were running Android OS. That is up considerably from the from 80% market share they had at the end of 2013.

And chances are that a lot of these new smart phones will also have Near Field Communication (NFC) chip technology allowing for proximity payments. ABI research expects a total of 320 million NFC-enabled devices toship in 2014, the great majority of them Android smart phones. And IHS research estimates 2 in 3 phones to come with NFC technology by 2018, amounting to 1.2 billion phones shipped with NFC.

With the HCE quiet revolution, banks and merchants have at their disposal a global platform for deploying mobile payment services. Today HCE/NFC support is already present in tens of millions of phones and will soon be present in the majority of new smart phones shipped globally.

Banks and merchants have collectively spent billions of dollars powering mobile apps to provide the best mobile services to consumers. They see their apps as the preferred low cost, high touch channel of interaction that can deliver rich services through mobile devices. With HCE, they can enable their existing banking and merchant apps to become wallets for payments anywhere in the physical environment, while allowing them to maintain total control over the brand and user experience.

And most companies understand today that having a branded mobile app in a consumer’s smart phone is the closest connection they will ever have with their customers. With the time spent on mobile devices rising, companies who have a mobile app on a consumer’s phone are given a spotlight and opportunity to connect like never before.

Starbucks has shown how important payment and loyalty are to keep apps relevant and usage up. It said recently that 11% its US sales volume comes through its own mobile wallet. This is just a staggering amount of transactions for a single retailer, about four million mobile payments per week, with around eight million consumers using mobile apps to pay. Having this repeat use channel of communication with consumers is priceless for Starbucks.

Leveraging HCE and NFC banks and merchants now have an opportunity to deliver the same experience on a larger scale in global markets and make their apps even more sticky and useful for consumers globally.

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