A main challenge in NFC payment is to make it possible for different actors to interact and coordinate with one another for proper functioning. This requires meeting the standards given by standard organizations which includes infrastructure for networks, different hardware's, software's, communication protocols. Challenges include trust, security, commitment and interoperability. This chapter gives the insight about the working and functioning among different actors making it convenient to understand the entire concept. From the users point of view mobile devices play the role of credit card. Mobile device manufacturers include only NFC chip and the antenna to their mobile device. SE is stored to SIM or UICC. MIDlet on customer's mobile device simulates contactless smart card mode so that POS terminal manufacturers need not to make new terminals equipped with NFC chip reader. Bank authorities need to have added responsibilities of authenticating. Since the architecture has MNO's and bank as important players both get multi-application NFC SE stored in SIM or UICC.
TopNfc Payment Architecture
Since contactless payment cards and NFC payments, through EMV, can work in a similar way these network owners are very dominant in the NFC payment ecosystem. Further, they are interacting with the payment industry and are engaging in collaborations with handset manufacturers. For example VISA have engaged in collaboration with Nokia and together executed trials on M-payments through NFC. Different actors involved in payment architecture are discussed in Simalliance (2013) are as follows.
Secure Element
The secure element (SE) is a secure microprocessor (a smart card chip) that includes a cryptographic processor to facilitate transaction authentication and security. It also provides secure memory for storing payment applications (e.g., American Express, Discover, MasterCard, Visa and other payment applications). SEs can also support other types of secure transactions, such as transit payment and ticketing, building access, or secure identification. A mobile handset can implement the SE in one or more of the following ways: MicroSD removable SE, Embedded SE and UICC removable SE.
Acquirer
The acquirer is responsible for handling financial acquisition in payment systems. That is, it initiates the clearing and settlement of payment transactions through payment schemes and banks. Acquirers facilitate the placement of terminals at retail locations and the communication of payment transactions to the payment networks for authorization and settlement. To support NFC payment transactions, acquirer terminals at merchant customer locations must support NFC contactless transactions.
Payment Network
It facilitates authorization processing and the settlement of bank card transactions. For NFC payment transactions, payment networks must support contactless messaging and authentication functions in order to make NFC payment successful.
Bank
In NFC payment system model, the bank holds the funding account for consumer payment but works with other parties to provision the payment application to NFC-enabled mobile phones.
In most cases, issuers deploy physical “companion cards” for customers to use at locations where NFC mobile contactless payment is not accepted. The bank card issuers’ host system needs to support mobile contactless transactions.