Host Card Emulation (HCE): Opening Up Opportunity for Prepaid And Other New Payment Products

In Host Card Emulation, Insights, Prepaid by Blake McClelland

It’s hard to believe that a year ago companies like Carta were still explaining the value of Host Card Emulation (HCE) mobile payments to potential customers.

Today, there’s no longer any question within the industry that mobile payments are the way forward: banks and others can digitize their customer base, build loyalty, collect invaluable user data that they can convert to better service and in turn, even more loyalty. They integrate themselves in every part of the customer’s day.

Relaying that benefit to actual users can sometimes be a harder sell. Sure customers may save a few seconds while paying, and they can leave their wallets at home, but it takes some time to form those new habits.

At the other end of the spectrum is a group of companies who can offer a clear benefit to users—no sales pitch required. They have a built-in customer-base and incomparable loyalty.

Program Managers.

Program Managers have a more intimate relationship with their users because customers have specifically sought out those prepaid cards. These cards fill some real need the customer’s bank isn’t meeting: whether it’s credit card functionality, remittances, gifting or loyalty rewards.

When you think of a successful mobile payments program, chances are you think of Starbucks. The user benefit is clear: rewards, birthday treats, never having to worry about forgetting your card, easy top-up and super fast payments. Customers have deep brand loyalty and it’s a product they already use every day.

So why then are program managers some of the last to go mobile? What’s holding them back?

A lot of program managers are just too small to support the infrastructure for a large mobile rollout. Overhauling their legacy systems would be too huge and costly an undertaking. But the need is there.

As a program manager looking to stay relevant, there are only a few options—and staying still isn’t one of them.

You can invest in the infrastructure to roll out your own mobile payment program—an approach that might be invaluable for the Starbucks of the world, with high volume, extensive loyalty and international reach—or you can partner with those aforementioned banks, telcos and handset manufacturers and offer them added value in exchange for robust infrastructure. Both mean freeing your operations of plastic manufacturing costs and distribution, but the first is costly and the second risks leaving you beholden to a partner’s UI and infrastructure.

There’s a third option: Carta’s hosted solution, Cloud Suite. The full service cloud-based payments and tokenization solution was designed for banks but meets all the needs of program managers. The PaaS product eliminates the need for complex integration, so PMs can focus their efforts on creating a flawless customer interface—choosing exactly what experience they want to give their customers.

It means program managers can grow market share, and lose plastic. They stay top of wallet without sacrificing user experience. And they stay relevant as their payment peers race to keep up.