While some point out that there's a battle over which parties control the secure element in a smartphone used for making NFC payments, Hung said that issue "is not as big of a deal," since the owner of a payment application will have a cryptographic key to fully control the app regardless of who provisioned the smartphone. Secure elements inside credit cards, whether in a smart chip or on a magnetic stripe, contain personal information about a user to allow a payment to be made.
Wireless carriers are hoping to have a secure element put in a SIM chip, while smartphone companies, such as BlackBerry maker Research In Motion and Android developer Google, want to store the security credentials on an NFC chip or embed them in the phone itself, Hung said.
Initial smartphones with NFC will probably have both embedded and SIM-based systems. A group of companies called trusted service managers, including companies such as smart-card vendor Gemalto, will emerge to act as neutral third parties to provision NFC capabilities.
In Japan, where NFC-equipped smartphones are widely used to pay for small retail purchases and transit tickets, wireless carrier NTT Docomo "played the role of the trusted service manager and brought together a cooperative of merchants, banks and carriers to make things work," Litan said.
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