Over the past two years, a battle has been brewing about which party should control the secure element in a smartphone. The wireless carriers want security put on a SIM chip, while the smartphone and mobile operating system makers, including Google, want the security information stored on an NFC chip or embedded within a separate chip.
That battle of where to place the secure element seems to have boiled over in the latest Google-Verizon spat.
As Gartner analyst Mark Hung pointed out in May, the owner of the payment application (in this case, Google with Google Wallet) should have a cryptographic key to control the app, regardless of which carrier provisions the smartphone.
So far, all the major credit card companies have said they are working to provide software for secure elements on upcoming NFC-ready phones that Isis will use in its mobile payment trials in Salt Lake City and Austin in 2012.
Google, meanwhile, has struck out on its own, obtaining the secure element in the Nexus S smartphone from semiconductor maker NXP, which also provides the phone's NFC chip. NXP is among several companies listed on Google's Web site as partners on Google Wallet. Another is First Data, which makes the Trusted Service Manager software that connects payment cards into a virtual wallet. Other players include MasterCard and Citi. The Nexus S 4G is the first and only smartphone to use Google Wallet, which is available on Sprint's WiMax network. Sprint, the third-largest wireless carrier is not a member of Isis.
Verizon may be debating whether the Isis consortium could also use NXP's secure element, or whether Verizon and its Isis partners must find another secure element that can either replace NXP's or run alongside it. Verizon might want the software found on a secure element put on a SIM chip, which Google hasn't done. The question is whether Verizon wants to move forward in a mobile payment world where users can move between different payment networks as they do with texting networks, or whether Verizon and the Isis consortium believe they can create a big enough network that it won't need Google Wallet or whatever Apple technology comes up with to support mobile payments.