Is there still a business case for MicroSD NFC?

Thursday 14 February 2013 | 13:13 CET | Background

Giesecke & Devrient and Phison Electronics have liquidated their MicroSD NFC payment joint-venture, NFC Times reported earlier this month. Other vendors continue their development of the MicroSD solution, which is presented as a bank-controlled alternative to other NFC solutions. However, technical complications and time could work against it.

The joint venture was dissolved effective 31 December 2012. GD-SFS (Secure Flash Services) was formed in October 2009 between G&D and Taiwan based semiconductor company Phison. NFC Times estimates the investment at EUR 3 million, based on statements that were made at the time.

GD-SFS started development of a microSD flash card with an embedded NFC coil, but later shifted the attention to a card that uses the swp-interface in the mobile phone. The parent companies say they find it currently more effective to support the relevant business directly by themselves rather than by the joint venture. The operations are to be reintegrated into the parent companies. Details however are not provided.

The microSD solution was presented as a third solution, next to the embedded Secure Element and the SIM-card S-E. It’s a quick way to get NFC-functionality into a lot of phones. After all, many smartphones and feature phones are fitted with an SD card slot. The Secure Element on the card runs its own operating system, so many phones would be NFC capable. There is however a technical drawback. The diminutive size of the MicroSD card means that the NFC-antenna is very small, affecting performance. On top of that, some mobile phone manufactures put the slot within the phone, possibly behind a metal case, further degrading antenna performance.

While G&D has thrown in the towel, others are undeterred. Logomotion has launched its own NFC microSD solution in October. Dubbed the LGM Card, it contains an independent secure element, allowing banks control over their customer relationships and existing payment processes. A second secure element contains a virtual POS terminal which lets customers pay for mobile content and additional applications directly on the LGM Card in their phones and also to make micro payments to small merchants. The portfolio of financial services is not complete however; ATM withdrawal is not possible with the mobile solution, so that requires a conventional card (which is also handy if the phone’s battery is dead).

iZettle has designed an NFC equipped case for the iPhone. The Secure Element sits in an SD card, the NFC antenna is built into the case. Since the phone does not power the NFC gear, the case contains its own battery, which can also feed the phone. This means the case is quite large compared to simple cases. It also adds 60 to 100 US dollar to the cost.

It would be very hard, if not impossible for a bank to recover that. Any accessory would be issued by a financial services provider. After all, the mobile operators favour the solution they control, which is the SIM card. The phone makers favour the embedded solution.

Another factor working against the accessory option is time. The commercial stage of NFC has been pushed back again and again. Recently, phone brands have started adopting NFC themselves – not for mobile payment, but for the less challenging applications, such as tag reading and device peering. While NFC adds to the manufacturing cost of the phone, services and accessories can recoup that. The tussle over who owns the Secure Element could tilt towards the embedded side. It’s probably fair to say that the microSD or accessory based solution was an outsider from the outset.

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