NPCA RAMP 2013 presentation

Mobile Payments Today

Joe Randazza CEONPCA

Dave Banks CIOCumberland Farms

Mobile Payments Today

THE CUMBERLAND FARMS - GULF OIL

GROUPCumberland Farms

Since 1939, Cumberland Farms has been committed to providing

customers with tremendous value and excellent service. It began as a

small two-cow dairy farm, and quickly expanded to offer more items at

better prices than anyone else around. Today there are almost 600

Cumberland Farms convenience stores spanning 11 states across the

northeast and Florida.

Gulf Oil LP

Gulf Oil got its start back in 1901 with an oil discovery in Spindletop,

Texas. Today Gulf Oil is a premier gasoline brand throughout the

Northeast with over 2,000 branded locations, and many more to come

nationwide. Gulf owns and operates 11 petroleum terminals and

distributes from over 100 exchange and thruput locations. Gulf remains a

market leader in petroleum distribution as well as in the development of

next-generation alternative fuels and other state of the art solutions for

our consumer's engine performance needs.

Cumberland Farms SmartPay

• Originally launched SmartPay in March 2012 with PayPal– Big media coverage, great customer feedback– Pilot in 200 Massachusetts stores– Never achieved more than 1% penetration

• Re-launched SmartPay in Feb 2013 with ACH provided by NPC– $.10/gallon discount on gasoline

• Heavy promotion including TV, radio, store signage, and digital programs

– Included a mag stripe card option and ability to use for in-store sales

Cumberland Farms SmartPay

• Rewards program launched October 1

– Free dispensed beverage for every 30 gallons purchased– Coupon presented on phone, 15 minute time out– Several more programs coming soon to drive inside sales

traffic and customer loyalty

• Technical

– Proprietary ‘Payment Gateway’ developed by Cumberland IT , in partnership with NPC and Retalix (POS)

– Coupon program developed in partnership with KouponMedia

– Client apps developed to cover all smartphones - iOS, Android and mobile web

– Back end settlement reconciliation and error checking in Oracle

SMARTPAY RESULTS

• Huge consumer acceptance since day 1 of re-launch• 100,000 new customers within 3 months• 175,000 customers presently• 30,000 transactions per peak day• 11% penetration system wide

SMARTPAY APP

WEBSITE

SMARTPAY CONSUMERS SAVINGS

SmartPay Video

Mobile Payments Today

Jenny Bullard CIOFlash Foods Inc

Convenience store chain of

172 stores located in

Georgia and North Florida.

Corporate office

headquarters - Waycross

Georgia

Owned by The Jones

Company

Flash Foods, Inc.

Tech-Savvy–Loyalty Driven

2005 2008

2013

Flash Foods GoBlue Mobile• Developed in association with NPCA, Zingon and

Pinnacle• Supports NPCA mPay Technology based on

tokenization • Pinnacle POS• NPCA and Zingon developed the App To Flash look

and feel• Launched June 2013 in Beta mode for payment

only• Launched to the public October 2013 with payment

and offers.

Gas Prices

Offers

LOYALTY CARD

MOBILE PAY

AT PUMP

IN STORE

GoBlue Video

Mobile Payments Today

Danny Portal CIONPCA

MOBILE PAYMENT

“Mobile proximity payments accounted for only .01% of the $3.98 trillion in retail

point of sale payments in 2012. Javelin predicted that mobile adoption and

industry push for mobile payments that the total amount of mobile payments at

the point of sale would increase from $398 million last year to $5.4 billion in

2018”

NPCA has three solutions of mobile payment in the market with various

technologies.

Cumberland Farms - SmartPay

Flash Foods - GoBlue Mobile

The Spinx Company - Spinx Mobile

Mobile Payment Competition

• The Mobile Space is crowded

• Who do you want dominating the mobile space?

• What can you do now to prevent another insurgence of payment interchange?

• Your Customers are mobile, are you?

Near Field Communication (NFC)

EMV (stands for Europay,

MasterCard and Visa)

Big Data

Omni-Channel

Where is the ROI?

The “Cloud”

The “Tap” and “Go” World

Showcasing

QR Codes

Unsolicited Authorizations

Mobile

Payments

Customer EngagementMobile Shopping Coupons

Loyalty

Social Local Mobile

SoLoMo

PayPal Beacon

ACH for Mobile

• ACH has a low fixed cost per transaction, versus a % based on the amount of the transaction.

• ACH based transactions do not place a hold on the consumer’s bank account.

• Transactions on mobile wallet using credit cards will have a higher rate.

• Mobile is a natural extension to supplement retailers card based loyalty program.

Merchant Controlled PaymentPOS enabled Technology

MERCHANTSBANKS

Wallets

Banks, Issuers, Associations, Processors

Fees:Legislation

Litigation

Competition

The issue is that "the entity that enrolls the customer, controls the opportunities." To the

extent that mobile payments provides other values, mobile payment is the vehicle for a

broader effort to create a better relationship with your customer.

Who owns the customer…………….the phone is the consumer

“He who Enrolls; Controls” Richard Crone, CEO, Crone Consulting,

Single –Sided Market Platform Economics or Two-

Sided Markets

Merchant Issued, POS-centric

Solutions

Wallet Providers (PayPal,

Google, ISIS, Banks (MC/VISA)

Card-not-present transactions

Aggregated Fees (cash in/ACH/Credit/

Debit)

Merchant Funded Rewards Issuer provided Rewards, Rewards

funded by fees

Merchant Enrolled 3rd Party (Wallet or Bank) Enrolled

Fixed Fees

Merchant Issued Debit funds merchant loyalty

Traditional Interchange funds the Banks loyalty

71% of consumers say price is the most

important factor in determining where they

buy gas - “NACS 2013 Consumer Fuels Reports”

Benefits include:

•Redeem award travel for 5,000 fewer miles

•2 miles for every $1 you spend on US Airways

purchases and 1 mile for every $1 you spend

everywhere else

•Annual companion certificate good for

roundtrip travel for up to 2 guest for $99 each

•Zone 2 boarding and First Class check-in

It’s all about rewards

Retailer Bank Fees

The comparison to others: Fixed Cost vs. Percentage Based Fees.

Fuel Dispenser Inside

Average Sale 35.74$ 6.50$

Bank/Wallet Fee Percentage 1.95%

Bank/Wallet Fee Fixed 0.10$

Total Fee 0.80$ 0.23$

Effective Rate 2.230% 3.49%

Fuel Dispenser Inside

Average Sale 35.74$ 6.50$

Bank/Wallet Fee Percentage 0.00%

Bank/Wallet Fee Fixed 0.18$

Total Fee 0.18$ 0.18$

Effective Rate 0.504% 2.77%

Traditional Bank/Wallet Fees

National Payment Card Association

My Consumer Experience.

MPAY TECHNOLOGY•Designed as an open architecture that can be supported today

•Submitted to NACS PCATS

•Presented to TAC Technical committee in May 2013

•Supported by Flash Foods, Pinnacle ,Verifone, Gilbarco POS

•Merchant can brand the mobile payment to their name

•Does not limit working with other vendor mobile solutions

•Developed in house by NPCA

•mPay Web Service API supports multiple web service methods.

•mPay Web Service interfaces to the POS (manual token entry or directly

sent to the POS)

•POS interfaces with NPCA Financial switch to support mobile payment

through an ACH transaction to the consumers bank account.

NPCA PLATFORM

EnrollmentAuthorization

Settlement

3rd Party Apps & Wallets Point of Sale Company

NPCA PLATFORM

EnrollmentAuthorization

Settlement

QSR

Grocery

Convenience Store

Drug Store

BUILT FOR EVERYDAY SPEND”

mPay Web ServicesGetAuthToken ----- performs a pre-pre-auth on the

user request and returns a payment token.

ActivateStorePump----- sends a payment token (pseudo-card) to a Store’s POS controller to activate the pump

FindStores ---- returns a listing of stores that are within range of a geographic point (latitude, longitude)

GetStoreAddress ----returns the store address details for a given merchant code and store number

mPay Web ServicesGetTransactionResult -----The GetTransactionResult

method returns the details for either a fueling transaction or an inside store transaction

GetAllstores-----The GetAllStores method returns a list of all stores for a given merchant when the Merchant ID is specified

MPAY ARCHITECTURE• 6 digit BIN + 3 digit ID (identifies mPay) + 7 digit token + check digit

• POS builds the Pseudo account number

• 639471 777 1943221C (This is a Pseudo account number)

• Processed on existing NPCA rails and POS supported

• Consumer enters 1943221 Token at the pump or terminal

• Token lives only for the life of the transaction or times out

• Card is converted to real card number at the NPCA Host Services

• Secure payment process - POS never sees the account number of the consumer

• Token language is replaced with Authorization number for ease of understanding by consumers on the phone.

Financial

Switch

DB

Token - Account

MPAY1 ARCHITECTUREEmail / PIN

7 Digit Token

Existing Connections to

Financial Switch

mPay

Option

Consumer

Consumer

Enters

Token

Select mPay

Pump or

Inside Store

POS

New

Logic

Build Pseudo

Card #

According to

API Specs

mPay ServiceConsumer

Mobile

App

MPAY2 ARCHITECTURE• 6 digit BIN + 3 digit ID (identifies mPay) + 7 digit token + check digit.

• 639471 777 1943221C (This is a Pseudo account number)

• Processed on existing NPCA rails and POS supported

• NPCA Web Services sends Pseudo account number via a POS link to the Controller.

• Token lives only for the life of the transaction or times out

• Pseudo Card is converted to real card number at the NPCA Host Services

• Secure payment process - POS never sees the account number of the consumer

• Token language is replaced with Authorization number for ease of understanding by consumers on the phone.

Consumer

Mobile

App

MPAY2 ARCHITECTUREEmail / PIN

ACK

POS

Financial

Switch

Consumer

Provides Location

Requires Pump #

Bluetooth Beacon Technology

will Provide Additional Location

and Pump Info

DB

Token - Account

Auto

Activate

mPay Service

Existing Connections to

Financial Switch

Q & A