Banks around the world have been applauding MasterCard and Visa's support for Host Card Emulation, or HCE.

In November 2013, Android started supporting HCE in its KitKat 4.4 operating system. HCE allows NFC applications on Android devices to emulate smart cards and financial institutions to host payment accounts in a virtual cloud. Without HCE, NFC-based cards need to be stored in a secure element that is embedded in mobile phone SIM cards and controlled by mobile operators.

"We introduced HCE to make it easier for developers to create NFC applications like mobile payments, loyalty programs, transit passes and other custom services," Benjamin Poiesz, Google Android Product Manager, said in a statement.

On February 19, MasterCard announced that it will publish a specification that uses HCE for secure NFC payment transactions. MasterCard worked with Capital One on its initial HCE pilot, and with Spain's Banco Sabadell on a European pilot. It says additional HCE deployments are planned with other financial institutions during 2014.

National Australia Bank, RBC Royal Bank of Canada and U.S. Bank are amongst the financial intuitions praising Visa's support of HCE. Visa announced on February 19 that it is making available a Visa payWave standard and a software development kit for cloud-based NFC payments.

"This is an exciting opportunity for NAB, and its partners, because it overcomes the limitations of existing solutions that are currently in pilot," Michael Starkey, NAB's general manager, channel development, digital and direct banking, said in a statement. "These existing solutions house account information on the phone and limit NFC solutions to a small selection of Android devices."

In mid-February, Spain's Bankinter launched the Mobile Virtual Card, which uses HCE technology to create a software version of EMV smart cards.