Spanish financial institution Bankinter may have come up with a creative way around the whole secure element issue. The bank announced this week that it's working on a mobile payment solution that instantly creates a single-use debit or credit card that users can store on their phones. That virtual account could be used either online or as a contactless payment transmitted via NFC at the point of sale.

The secure element is the chip on mobile devices that stores payment credentials, turning the device into a proxy for a plastic card. Either embedded in the phone or added as a SIM chip, the SE is an important part of the mobile payment discussion because in emulating a credit card it places the payment method in the hands of a consumer and places the cardholder actually in the merchant's location. That means consumers get the convenience of paying with a phone and merchants pay lower card-present interchange rates.

Through Bankinter's new program, customers can download an app onto their phones and register the product through their bank's own website. Once verified and enabled, the application would hold a companion card to a user's physical card, one that not only uses secure virtualization and two factor authentication but also would have limited utility to fraudsters since it's only intended for a single use. 

For FIs looking to offer mobile payment solutions, the benefit of this approach is clear: no longer having to deal with third parties like Google or wireless carriers looking to control and manage the secure element on mobile devices. Instead, the FI can handle the process of issuing and managing payment credentials on the phone all on its own.

"The Mobile Virtual Card solution eliminates the main difficulties that today are slowing the commercial launch of NFC payments, and [brings NFC into] compatibility with the standards of the financial industry, helping to avoid market fragmentation that in no way benefits the final consumer," said Jacobo Díaz, director of innovation, products, markets and quality for Bankinter.

The product is being developed in conjunction with Visa Europe, Net1 UEPS and Seglan, and will be available sometime this summer, Bankinter said.

Read more about NFC/Contactless payments.