RBC's Tech Push Aims to Catalyze 'Connected' Payments

Royal Bank of Canada's marching ahead on two innovations designed to help it blanket the country's mature point of sale and connected devices.

The bank has taken host card emulation (HCE), an Android-driven form of Near Field Communication that's designed to be more flexible than standard NFC, out of an internal pilot. And last week, RBC received a U.S. patent on its Secure Cloud payment and security system.

Both HCE and the cloud system are designed to make it easier to protect users’ mobile credentials and enable mobile payments by removing sensitive information from the shopper's device. By being proactive with these technologies, RBC aims to pull ahead of the pack as payment technology evolves.

"Contactless is so extensive that the payment itself isn't that interesting," said Linda Mantia, executive vice president of digital and cards at RBC. "We're working on the value-added side."

RBC's mobile payments strategy is primarily focused on Canada, which it says is ripe for innovation.The country, which is almost fully EMV compliant and contactless enabled, is ready to embrace a new generation of payments that goes beyond cards and smartphones, Mantia said.

HCE allows contactless payments without provisioned hardware on a computing device, such as a smartphone; prior to its introduction on Android, some carriers were able to block NFC wallets from their networks by controlling access to devices' secure elements.

RBC has also built an app Google's next version of Android (nicknamed Marshmallow) for Androids' new operating system. With this app, RBC is focused on alternative authentication technology that examines each device's characteristics.

The bank's credential technology also links to the RBC Secure Cloud, which the bank uses to store client data remotely. Tokenized data is transmitted and decoded on the client's mobile device at the point of sale (tokenization replaces sensitive account data with a secure value called a token).

HCE and the cloud make it easier for RBC to enable payments for wearable devices, since the identity vetting and data storage are separate from the end user's computing device.

"We're really excited about wearables," Mantia said. "The tech allows us to store info in the cloud and use layered tokenization. We can bring security to any connected device."

Wearable devices are advancing quickly as a payments option, and Mantia said Visa's in-car payments project was also an interesting play.

RBC is active in wearables, with a recent project focusing on testing a band that authenticates users by heartbeat. RBC has long been an early adopter of new payments technology; it worked with Interac, Canada's national debit system, on a mobile payments test at McDonald's more than two years ago.

"Wherever people want to make or accept payments, we want to be the 'last inch' that connects them," Mantia said.

Apple does not use HCE for Apple Pay's contactless payment system. The Cupertino, Calif.-based technology giant is expected to launch its NFC-based mobile wallet in Canada soon.

"Financial institutions should consider their mobile payments strategy holistically," said Zil Bareisis, a senior analyst at Celent, noting cloud-based payments can be attractive to many issuers, but are still available only to Android users. "How can you address all mobile platforms and various types of payments? Which of the third-party wallets should you support?"