Microsoft Battles Android on Many Fronts: Now Payments?

by Tim Sloane 0

This article from SiliconANGLE indicates that the payments war is heating up with Microsoft starting to apply for payment related licenses from state and federal authorities:

“If the latest report proves accurate, Windows Phone users may soon have their very own mobile payments solution, just like their iPhone and Android smartphone toting friends. According to a report by USA Today, Faisal Khan, a banking and payments consultant at Faisal Khan & Company, has uncovered documents showing that Idaho has awarded Microsoft a money transmitter license.
According to a document from the Nationwide Multistate Licensing System (NMLS), Microsoft Payments Inc. was awarded its Idaho money transmitter license on March 24.
Another document shows that Microsoft Payments Inc. has also registered with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) as a money transmitter and provider and seller of prepaid access in all 50 U.S. States.
No other States have awarded the company a money transmitter license yet.
The Idaho license and FinCEN filing are clear indicators that Microsoft intends to enter the mobile payments market to compete with offerings from Apple Inc. and Google Inc.”

The article goes on to describe the lead Apple and Google have in payments but also shares some payment related details regarding Microsoft’s mobile version of Windows 10:

“Microsoft’s application for money transmitter licenses is perhaps not such a surprise in view of recent announcements by the company. In March, Microsoft announced that the mobile version of its forthcoming Windows 10 operating system will include support for Host Card Emulation (HCE). HCE allows for credit card information to be transmitted securely between a user’s smartphone and a payment terminal without the use of a Secure Element embedded in a carrier-supported SIM.
The company has also said that Windows 10 would support biometric access and facial recognition, both of which can be used to secure mobile payments.
It is still early days for Microsoft Payments though.
“As a mobile-first, cloud-first company, Microsoft continues to evolve our offerings to meet the needs of both our commercial customers and consumers,” a Microsoft spokesperson told Ars Technica. “Becoming a money service business gives us the flexibility to provide new, innovative cloud services to our customers but we do not have any product announcements at this time.””

Hopefully this statement of HCE support does not indicate a unwillingness by Microsoft to support a Secure Element based payment implementation, which would be significantly more secure and, depending on implementation, more reliable.

In what may be a highly related issue, Microsoft has also funded an effort by Cyanogen to establish a an alternative to Google apps operating on the Open Source implementation of Android (see Microsoft to Battle Google for Control of Open Source Android). Microsoft has also announced its long term growth strategy called “Apps Everywhere” (See Microsoft ‘Apps Everywhere’ Strategy Further Threatens Google Control of Android). If, and this may be a big if, Microsoft considers its payment solution an app, then this could well be the first cross platform payment wallet available from a major international corporation.


Overview by

Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

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