Security is one of the fundamental elements of any payment solution. Financial Institutions increasingly seek to mitigate the risk of fraud in order to protect their customers and hence their own payment franchise. Enhanced security on plastic cards requires a so-called "Secure Element (SE)" - like a chip card - to store the bank's payment credentials (security keys) and other critical data. One example is the introduction of “Chip and PIN" (EMV chip-based security) on cards in Europe to replace magistrate-based systems.

While the direction for plastic cards seems clear, the Industry is looking for ways to secure Mobile Payments at a comparable level. The question is then, which SE in the mobile handset is available to facilitate the mass-market introduction of secure mobile payments?

Mobey Forum has taken this topic as a subject of the current WhitePaper. It elaborates on the question how different Secure Elements (SEs) can enable Financial Institutions (FIs) to offer Mobile Financial Services (MFS) and hence empower the take-off of the MFS ecosystem. It is targeted at business managers in Financial Institutions. For them, it strives to clarify the business implications of the various technical SE alternatives. Therefore:

The paper presents a brief status analysis of the MFS Ecosystem and the Stakeholder positions in the MFS Value Chain. This includes a short introduction of the SE-related Stakeholder roles in the MFS Ecosystem (SE Vendor, SE Issuer, Application Issuer and Trusted Service Manager) as well as a comment on the various Applications for MFS, the SE issuance process, the lifecycle management and potential Trusted Service Manager (TSM) pricing models. (Chapter 1)

Based on this conceptual framework, the paper elaborates on the potential roles of the different SEs for MFS. The analyzed SEs are: Stickers (active and passive), Secure Micro SD Cards, Universal Integrated Circuit Card, Embedded Secure Element and Trusted Mobile Base. For each of the SEs, a concept description, different business model scenarios, technical enablers and inhibitors and opportunities and challenges are presented. (Chapter 2)

The paper concludes with a summary about the various SE alternatives for MFS and presents a brief outlook on the next steps for the MFS industry. (Chapter 3)

It is complemented by a detailed appendix on the requirements towards SEs for MFS (Appendix).

In brief, the paper finds that each FI now needs to decide which position it wants to claim in the MFS Value Chain – to become an SE Vendor, SE Issuer, Application Issuer or a combination of these? As a consequence, the FI will be able to choose the adequate SE alternative and decide which process of key provisioning shall be implemented. Furthermore, the choice of a precise MFS Value Chain position and SE technology will help the FI to identify the most interesting partners to establish joint business models and trigger a quick diffusion of MFS.