Bernardo Nicoletti

Transigma

Dubai, UAE, March 19, 2014

Opportunities and Threats of Prepaid Mobile

Payments: an International Perspective

2

PAYMENT CARD MARKET – EMEA

2012 2017

Market Size: 1.9B Market Size: 2.6B

• Western EU continues to be the largest market in EMEA region consisting of 60% of card market today

• Western EU, only region to show an increase in growth (forecasted) mainly driven by volume increase in prepaid cards

and debit cards.

• Middle East and Africa, a bigger market than Eastern EU forecasted to grow 2X faster in next 5 years:� Growth mainly driven by increase in credit and debit card volumes.

3

How Can We Grow in this Market?

Evolve or DieIt is not the strongest of the species that

“It is not the strongest of the species that

survives, nor the most intelligent that

survives. It is the one that is the most

adaptable to change.”

Attributed to Charles Darwin

–Charles

5

A Big Trend: De • physical • ization

What was once physical —

newspapers, magazines,

music, movies, coupons and

cash — now exists virtually

and most frequently on the

consumer’s mobile device.

.

6

Instant & Simultaneous

Consumers can access

virtual assets instantly and

have access to them on the

smartphone, tablet, TV and

PC at the same time.

Example: Stream a movie

instantly and it’s available

on

every TV, PC and mobile

device

the consumer owns.

7

Convergence

Everything is converging. One electronic device serving as a TV, PC, Internet Browser, Stereo. Multiple credit and debit cards merging onto a single physical card.

Evidence is everywhere.

Radically changing consumer behavior — and expectations.

8

Mobile phones are being

adopted 10X faster than

PCs, 3X faster than social

media and 2X faster than

the Internet

Accelerating rate of change

mPayments will achieve scale

faster than any previous

payments innovation in history

Touch screens and apps changing the

ways consumers live, work and play

Source: Flurry Analysis, 2012Technologies

9

New channel, new revenue streams

mPayments creates a rare new channel

based on:

-Individuality and ubiquitous presence of

the mobile device

-Individual/device location-based

capabilities (.. The nearest ATM)

-Knowledge of the

customer/demonstrated interests

-Ability to deliver individually relevant

content instantly that can influence

purchasing behavior during a shopping

experience

mCommerce drives 25% increase in

value and 30% increase in frequency.

10

Smartphone Ubiquity

660M

997M

30M

25%

2013 20162013 2016

Smart

Phone

Sales

NFC

Enabled

Smart

Phones

More than 6B mobile

phones worldwide

today

Annual smartphone

sales to reach 997M

units in 2016

More than 67% of

smartphones will be

NFC enabled by 2016Source: Nielson Study, 2013

*Data point is limited to the U.S.

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Smartphone Ubiquity – EMEA Example - Italy

41%

67%

5%

25%

2013 20162013 2016

Smart Phone

Penetration

NFC

Enabled

Smart

Phones

Smartphones will

grow from 39M in

2013 to 66M in 2016

– 106% of the

population

Over 70% of

smartphones sold in

2016 will be NFC

enabled

Mobile Payments: A Disruptive Innovation

Product Combines All types of Payments

Process Combines different modes: biometrics, pictures, voice

Distribution Branchless and Everywhere

Business Model Partnership bx Telco and Financial Institutions

In-store

navigation

ATM/Branch Locations

Self-scanning &

Self-checkout

Shopping Lists

Loyalty

Coupons Extended packaging

Mobile eCommerce

Payments

Advertising &

Promotions

A Disruptive Innovation:

The "Mobile Payments Experience"

Strengths

• Everywhere

• Always with you

• Privacy

Weaknesses

• Coverage

• Size of the screen

• Multiple OS

Swot Analysis for Mobile Banking

Opportunities

• Young People

• Unbanked

• Underbanked

Threats

• Device Lost or Stolen

• Latency

• Integration

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Significant growth to be captured with contactless

encoding systems everywhere !

Significant growth to be captured with contactless Significant growth to be captured with contactless

encoding systems everywhere ! encoding systems everywhere !

Eurosmart Chipcard Forecast

Of which Smart Secure Contactless Devices (microprocessor)

* Source SIM Alliance

WW Shipment of Smart Secure Devices (microprocessor)

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More than 100 projects/pilots using several technologies

� NFC stickers add-on

� Secure Elements ( SIM, microSD, embedded SE)

� QR Codes

� Peer to Peer SW base (M-Pesa, Kwixo, i-Zettle, Square…..)

Major facts

� Poland: The “contactless” country and best ground for mobile deployment

� Events and low value payments (Olympics, Transport for London)

� Y Generation to boost (E.g., Turkey)

� Telco operators want a piece of the cake (Orange, T-Mobile, Vodafone,….)

� Banks, related IT companies, Globals, and Bureaus want to protect their share and develop new revenues streams

� ID programs may add more traction

� Google wallet non-existent

New Digital shopping experience launched by Visa Europe and MC

� V.me in France, UK and Spain (BBVA 1st bank to test it)

� MasterPass

Mobile Payment projects in EMEA (1/2)

Opportunity: No Clear Technology Winner Today Opportunity: No Clear Technology Winner Today Opportunity: No Clear Technology Winner Today

Payment Acceptance Infrastructure Remains Underdeveloped Payment Acceptance Infrastructure Remains Underdeveloped Payment Acceptance Infrastructure Remains Underdeveloped

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Mobile Payment projects in EMEA (2/2)

Projects with highlighted in Orange

SIM as SE Micro SD as SE Embedded SE

Banca Intesa Sanpaolo, BPCE, PKO Bank, La Caixa, BBVA, Banco Sabadel, Banco Santander, PKO Bank Polski, ING BankŚląski, mBank, Multibank

LBB, BPCE, ING Poland, Tatrabanka,

Akbank, Komercni Banka, RBS, NatWest , Yapi Kredi bank, Raiffeisen Bank

Visa/ Samsung

MasterCard Mobile PayPass (MMPP) pilots:

Visa VMPA pilots:

Solutions without SE, closed loop element:

�Bankinter and Visa

�Garanti Bank with Tags and QR codes

�Oberthur embedded SE “Pearl” for google wallet

�Cloud base SE

�Other SW, SMS based solutions (M-Pesa)

SIM as SE Micro SD as SE Embedded SE

Barclaycard, Zachodny Bank WBK, ING (Romania), Finanz Bank, Halk Bank, RBS, Banka Koper, ING (NL), ABN Amro, Rabobank,DnBNor, Standard Chartered , Bank BPH, Banco Santander, Dortmunder Volksbank

Credit Agricole, ABSA Tinkoff Kredit

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Competitive Urgency

Source: Forrester Research, 2013

You should act NOW

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What Should we Do?

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Recommended Approach

• Determine goals &

objectives

• Define your ecosystem

• Make mPayment

technology decisions

• Production-ready

deployment

• Measure, adapt and

optimize

21

Determine Goals & Objectives

Defensive

– Protect existing customer base

against traditional competitors

– Prevent disintermediation by new

non-traditional competitors

Offensive

– New channel/new revenue

– Expand offerings for existing

customers

– Attract new customers,

gain share

22

Define your Ecosystem

Choose Technology Partners

• Broadest set of solutions — fewest

points of integration

• Experience in virtual (mPayment)

issuance

• Established relationships with

MasterCard, Visa and other market

leaders

• Deployment of technologies that

conform to industry standards

• Extensive mPayment deployment

experience required

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Make mPayments technology decisions

• Form factors — NFC, bar

code, QR codes, cloud

• Storage form factors

• On-premise TSM or hosted

model approach — instant

or batch provisioning

• Integrated physical card

and mobile virtual card

instant issuance

• Integrated mobile payment,

mobile banking and mobile

commerce apps

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Production-ready deployment

• Start with manageable segment

of customer base – current

mobile banking users?

• Develop and deploy production-

ready software and ecosystem

— technology that can scale up

quickly

• Move quickly — most

deployments take 2-12 months

and market is moving rapidly

• Can always change form

factors and other particulars

The (Near) Future

Integrate Mass Private

Banking

Mobilize

ProductProduct ProcessProcess InfrastructureInfrastructure

Mobile Banking Will Grow 300% Over the Next Four Years Says Aite

Consultancy .. But also Books

Mobile

Banking

2012 2013 2014

Palgrave-MacMillan