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Contactless Payment Trends and Innovation Frederic Guillou, Commercial Director Southern Africa, Banking & Retail Johannesburg, 18th September 2014
2
Agenda
1. Gemalto
2. Overview of Contactless payments
3. Payment convergence and bridge technologies
4. NFC Wallet use case in retail
5. Mobile Financial Service / Inclusion
We are a robust, international company
3
" €2.4bn revenues 2013 " Listed on NYSE Euronext
Amsterdam & Paris " Member of French CAC 40 &
Dutch AEX indices " 12,000 employees " 113 nationalities " Customers in 190 countries
#1 Chip payment cards
#1 Machine-to-Machine
#1 SIM/LTE/NFC cards
#1 Online banking
#1 eDocuments
Leadership experience
" Trusted 3rd party between the Banks, MNO’s, Gov
" Gemalto invested 177 million Euro on RnD in 2013
" Filed 110 Patents in 2013 – 1,700 engineers
4
Agenda
1. Gemalto
2. Overview of Contactless payments
3. Payment convergence and bridge technologies
4. NFC Wallet use case in retail
5. Mobile Financial Service / Inclusion
EMV Contactless is now in mass deployment in all parts of the World
5
POLAND " 17 Mu cards " 140 Ku POS
UK " >31 Mu cards " 280 Ku POS
FRANCE
" 19 Mu cards " 170 Ku POS
SPAIN " >8 Mu cards " 266 Ku POS
TURKEY " >10 Mu cards " 69 000 POS
CANADA " >20 Mu cards " >100 Ku POS
AUSTRALIA " >20 Mu cards " >150 Ku POS
NEW ZEALAND " >1 Mu cards " >10 Ku POS
SINGAPORE " 2 Mu cards " >20 Ku POS
TAIWAN " ~6Mu cards " >24 Ku POS
SLOVAKIA " >1.4 Mu cards " >12 Ku POS
Brazil " 1 Mu cards " 1 Mu POS
Infrastructure is here – contactless Payment ready to take off in
2014!
SOUTH AFRICA " >1 Mu cards
EMV contactless: A fast growing market
6
At end 2013 1 Billion DI cards issued
(since 2007)
50 Mu in 2010 110 Mu in 2011 200 Mu in 2012
600 Mu DI cards in 2013 (incl. 350Mu for China)
DI cards: Dual Interface
Contactless Payment A World of Opportunities for issuers
• To increase the number of transactions Cash replacement 1. Revenue
• To offer new services to end-users Thanks to the contactless interface 2. Services
• To tap a new big market Pay@Gate concept 3. Transit
• To develop your brand & innovation New techno & customer experience 4. Brand
• To pave the way for new payment method Mobile payment, New form factors 5. Future
7 |
Poland Use Case
8
June 2013
140 000 contactless POS (50%)
17 million ctless cards (60%)
16 million contactless transactions per month
€57 million spent on VISA contactless cards and phones in March 2013
603,3 619 644,4
697
677,4
550
600
650
700
750
2008 2009 2010 2011 2012
Cash Transactions' Value ( BN PLN )
Source: Euromonitor report 2012
Number of Contactless Transactions ( in ‘000 )
Autralia Use Case
9
June 2013
>150 000 contactless POS (20%)
>20 million ctless cards
>50 million contactless transactions per month
25% - 30% of all transactions below the AUS$100 limit are
contactless
10
Agenda
1. Gemalto
2. Overview of Contactless payments
3. Payment convergence and bridge technologies
4. NFC Wallet use case in retail
5. Mobile Financial Service / Inclusion
Contactless Sticker A simple and natural way to pay
11
" Contactless experience Enjoy the speed and convenience of contactless payment
" Your preferred device Turn easily any device (MP3 player, mobile phone) into a contactless payment device
" Always in the pocket Three quarters of mobile phone owners never leave home without mobile phone*
75%
Optelio Contactless Sticker Part of the contactless strategy
12
" A driver for contactless adoption
Contactless is a change of habits - Consumers must “think contactless” Sticker boost contactless awareness (no contact interface)
" Higher activation rate for cards and stickers " More contactless transactions
Contactless card
Sticker
NFC " Prepare the future now
Educate people to pay with the mobile phone
Deployment possible without commercial agreement with third parties Compatible with all current mobile phones (no physical link between
sticker and phone)
La Caixa - Spain Toward a real mobile payment experience
13
Watch the video www.youtube.com
" Objective: A real mobile payment experience " 200 000 stickers to be issued in Barcelona
" No PIN below 20€ (PIN code is asked above 20€)
" Act as a companion payment mean associated to a contactless credit card
" Companion tools to manage the sticker:
Management of the sticker " Consult the latest transactions " Block the sticker " (and other banking options: money
transfer, balance check, etc.)
SMS recept ion fo r every payment. Mobile application
Gemalto Sticker references
14
Australia
Spain
Poland
Russia
Hungary
Greece
Germany
Latvia
Slovakia
Ukraine
Israel
Austria
15
Success Story: Barclays, UK British Summer Time festival
Upgrade your experience at British Summer Time
• Get fast-track access into the event
• Make fast and secure contactless payments
• Unlock special experiences on the day
• Keep on using your bPay band after the event at hundreds of thousands of retailers across the UK Watch the video
www.youtube.com
16
Agenda
1. Gemalto
2. Overview of Contactless payments
3. Payment convergence and bridge technologies
4. NFC Wallet use case in retail
5. Mobile Financial Service / Inclusion
NFC has become a reality, despite the emergence of competing technologies NFC beginning of 2014
17 17
MNO Cooperate with banks(France, Turkey, Italy, Canada, Japan …) Co-branded Cards (UK, Poland etc..)
MNO and Banks launch payment services
Payment, loyalty, couponing aggregated I a single wallet (USA-ISIS, Singapore-IDA)
Consortiums aggregate services in a single wallet
Smart posters Shopping walls (Seoul, Tokyo, Moscow) In-shop experience (casino, carrefour)
Retailers focus on in-store interaction and OOH advertising
First commercial launches (Spain, France, Singapore)
Transport
18
Mobile payment landscape is in permanent evolution…
… and still more to come (Apple Pay, BLE, Coin, Biometrics, xCoin etc…)
Payment is not an isolated service Its take off and mass adoption is connected to other proximity services
19
Retail services spurs the payment
Transport spurs the payment
Payment spurs transport & retail
20
A new NFC shopping experience
21
Isis is an NFC Mobile Wallet application available in the US. It allows end-users to pay, redeem coupons and get loyalty points with their mobile phone.
WHAT ARE THE CONSUMER EXPECTATIONS
Gemalto Confidential 22
2/3 68%: Provides convenience, ease of use for payment
59% 59%: Enables me to carry less cash, fewer cards
1/2 52%: Allows me to receive mobile offers, store discounts
45% 45%: Allows me to redeem points or offers directly from my phone
41% 41%: Improves my loyalty rewards
" These are US statistics
" Willingness to share personal data may vary from country to country
Is ISIS matching Consumer expectations: Loyatly is attractive and boosts usage Retail spurs payment
23
2/3 Two-thirds of active users opted in to receive offers and messages
7 The average user is following seven brands, (an American owns an average of 18 loyalty cards, only 2 are active)
X 2 wallet users engaged in loyalty and offers, tap up to two times more frequently than users who only make payments
90% More than one-third of active Isis Mobile Wallets users in Austin have loaded a My Coke Rewards card of which 90 percent of these are new to the My Coke Rewards program
Source: NFC World
two in three Isis users have added a payment card to their Isis Mobile Wallet 2/3
$15 Isis' Toys R Us campaign, which offered US$15 back on purchases over $30 during the holiday period, was one of the toy retailer's most effective digital coupon campaigns that they have ever run
ISIS Adoption
Gemalto Confidential 24
" Exponential rate
" Isis is growing at 50% each month," CEO Michael Abbott told NFC World
Activated ISIS Wallets
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Slovakia
Poland
China
Hungary
Brasil
UK
Australia
Spain
France
Italy
US
Netherlands
Percentage of contactless POS Q2 2013 Q3 2013 Q4 2013 Q1 2014
25
Agenda
1. Gemalto
2. Overview of Contactless payments
3. Payment convergence and bridge technologies
4. NFC Wallet use case on retail
5. Mobile Financial Service / Inclusion
What are Mobile Financial Services (MFS)?
26 Gemalto Confidential
Where telecom and
banking converge
Using the mobile device for financial services
Immediate, simple and convenient access to
money-related transactions
Send money
Buy airtime
Receive salary
Pay bills
Save money
Purchase goods
Pay for transportation
Buy tickets
Pay for parking
Pay for education Shop online
Buy insurance
Receive and pay off financing
Check balance
27 Gemalto Confidential Mobile Wallet
Developed Markets Developing Markets
Mobile Banking
Notifications and alerts
Bill payment, transfers and transactions
Account and wealth
management
Financing – credit, loans, insurance
Enabling secure access to banking services on the
mobile device
Mobile Money
Mobile Wallet and Stored Value Accounts
Person-to-Person
Transfer
Bill Payment
Airtime Top-Up
International Money Transfer
Providing secure banking and payment services for
the unbanked
Mobile Payment
Proximity Payment
Remote Payment
Peer-to-Peer
Prepaid Accounts
Mobile Wallet
International Money Transfer
Enabling and bringing value to payments on mobile
Mobile NFC TSM Services
Proximity Payment
Issuance and lifecycle management of NFC services for service
providers
NFC Service Engine administration for MNO
Couponing & loyalty
programs
NFC services deployment and secure provisioning of credential management
Mobile Financial Services solutions allow MNOs and Banks to leverage the mobile device to increase revenue, extend market reach and reduce churn"
DEVELOPED MARKETS • Mobile remote payments growing fast due to
smartphone penetration • Carrier billing, payment networks challenged
by new entrants • Mobile NFC is a nascent payment scheme, to
convert cash transactions, increase marketing-driven revenue, and increase transaction frequency
Mobile Financial Services Market Different Markets, Different Stories
28
DEVELOPING MARKETS • Changing the lives of the Unbanked • Replacing cash with m-payments • Telco-led initiatives, banks now embarking • Challenges reaching critical mass • Lack of interoperability
€20Bn 2011
€135Bn 2014
€110Bn 2011
€415Bn 2014
Transaction Value
Developing: LATAM, MEA, India and rest of Asia developing; Developed: Noram, Europe, Russia, JaKor, China and rest of Asia developed
Gemalto Confidential
29 Source: Informa, 2011 Developed markets: Noram, Europe, Russia, JaKor, China and rest of Asia developed
Developed Markets
Market Trends
Developing Markets
Market Trends
Remote payments and P2P dominate, Service revenues at 3%
3.4%
2.8% €135B
€20B
2.1%
1.9%
Remote and local payments dominate, Service revenues at 2%
€415B
€110B
Mobile Financial Services Market Forecasts
Gemalto Confidential
MFS Innovation
• Wallmart launch local money transfer service • MoneyGram : 31% decline and 33% drop in revenue
• M-Pesa – Purchase stocks on the Kenya Stock Exchange
• M-Pesa – Micro loans
• Kenya: > 7M users, > Sh13 Billion in loans • Tanzania: >TSh 1.2bn in 3 weeks
• Equity Bank – thin SIM to sit on top of customers SIM cards. There are security concerns
• Apple Pay – Secure Element with DPAN
Gemalto Confidential 30
Thanks Contact Gemalto to engage and know more about the NFC opportunities
Follow us on www.gemalto.com