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Quick Guide to Mobile Wallet Terminology for Retailers and Consumers

Mobile Wallets

As promised in my most recent blogs on mobile wallets, I have put together a concise but comprehensive list of terminology you might encounter when reading literature on mobile wallets. This is simply an additional resource on mobile wallets terminology, and its purpose is not to explain how mobile wallets work, but rather to provide a list of their component parts.

Mobile Wallet Application – An application or user interface that stores and manages account information such as debit, credit, rewards, and gift cards and allows you to make payments and transactions using a mobile phone.  

Near Field Communication (NFC) – Enables devices such as smartphones, tablets, and payment terminals to exchange information wirelessly. NFC devices use electromagnetic radio fields, allowing the device to send and receive information when in close proximity with another NFC-enabled device. NFC devices can be either active or passive. An active device, such as a tablet or smart phone, can retrieve as well as transmit information. A passive device, such as a poster or advertisement, cannot retrieve information; however, the device contains information that an active NFC device can then read. To ensure security, sensitive account information, such as debit and credit card numbers, are encrypted and stored in a secure element within the device.

Secure Element – The secure element is simply a secure memory environment. Secure elements include secure smart card chips (used by most NFC-enable devices), SD cards, and SIM cards, which are located inside the device. These cards are used for storing and retrieving account information in an encrypted fashion. The secure element directly exchanges information with the Trusted Service Manager.  

Trusted Service Manager (TSM) – According to First Data, the TSM’s primary role is to act as a neutral liaison and provision personal account information onto the secure element of a mobile device. Once the consumer has their account information entered into the device and the card issuing bank has verified the account, the TSM is notified and it provisions the phone’s secure element with account data that activates the account for a mobile transaction.

In conclusion

As a retailer or consumer, it is important to understand mobile wallets before you jump right in and try them out. Different mobile wallets work in different ways, and to ensure your sensitive information isn’t at risk, do your homework before selecting a service provider.

I hope this guide was helpful in learning the terminology and components. If you have any further questions on mobile wallets, please leave a comment below, and I will try and cover it in my next blog.

Want to know more?

This blog is meant to be a short summary. If you’re looking for additional resources and more detailed information on mobile wallets, check out the links provided below:

Near Field Communication

Smart Card Alliance

First Data